Win 10 Upgrade fails - "Setup has failed to initialize the working directory"

MBP 13" late 2012 - have been running pre-release version in separate VM with only a few problems. Went to upgrade VM with Win 8.1 32-bit; ran media creation tool - got through first 2 downloads - at 'Preparing 2%' received above message re failure to initialize working directory. Repeated twice with same results. Any suggestions. Thanks in advance.

 

@44franktn please try this KB

 

Have reported the same "working directory" error a few days ago. The KB you reference doesn't address the issue or tell us what causes the error.
Please reply with relevant solutions instead of KB items. Thanks!

 

https://www.reddit.com/r/Windows10/comments/3f2pxo/psa_if_youre_manually_downloading_windows_10/

Read this!, try and comment

 

Thanks for the link but I have neither the time nor the patience to go through the process described in the hundreds of posts. If this is the Windows upgrade process, I'll just stick to Win 7 instead of dealing with this hassle. They could learn a thing or two from Apple how to do an upgrade!

 

Maria, thank you, but I was working from the instructions on that kb.
JulioU, thanks for the link. I tried this and it seems to work so far. I did get an error saying I didn't have enough free disk space on the c: drive. There was 30gb free on my hard drive, guess I needed to set my VM to a permanent size. However, the USB I was using had enough free space for me to continue (10gb). Reached "Upgrading Windows" 2 hours ago -screen now 10% complete. This will be a long haul. I'll report when (and if) if ever finishes. I think webworks is right. Wait for awhile to update.

 

A follow-up to my previous post - shortly after I posted the above reply the upgrade process completed rapidly. It moved to the setup stage about 15 min later. Setup was successful - Win 10 now installed and working. Total time - 3hrs. So far no need to reinstall parallels tools. The new web browser - Edge - is a still a little flakey, but office works fine. To summarize, from web2nr in above reddit link: "Copy everything in the "$Windows.~WS." directory onto an empty USB, delete the old directory, then run "setup.exe" from that USB. Worked for me."

 

Excellent!, I'm glad it worked!

 

I had the same working directory error. What worked for me was freeing up space on the virtual hard disk. I initially only had 2 gigs free. I increased my free space to 16 gigs and rerunning setup worked fine after that. I am guessing you should have at least 10 gigs free.