Cannot start Windows Server installation

Question

Hi,
I want to upgrade my Server 2008 R2 to Server 2012 R2. But everytime I start the setup in Windows for an in-place upgrade,  an error message pops-up saying "Windows Setup experienced an unexpected error. To install Windows, restart the
installation.", right after the "Setup is starting..." stage.
This doesn't have to do with the media or drive. I tried with a virtual drive, and still the same. It doesn't have to do with the image as well, the same error appears if I try to start a Server 2008 R2 installation or any other Windows installation.
The OS hard disk is a dynamic hard disk.
Here is the log from Setup.act:
2013-12-21 03:24:09, Info                  IBS    InstallWindows:Successfully loaded resource language [en-US]
2013-12-21 03:24:09, Info       [0x0601c1] IBS    InstallWindows:Install Path = C:\$WINDOWS.~BT\Sources
2013-12-21 03:24:09, Info       [0x0601c2] IBS    InstallWindows:Setup Phase = 1
2013-12-21 03:24:09, Info       [0x0606cc] IBS    LogBootDeviceInfo:The firmware boot device ARC path is [multi(0)disk(0)rdisk(0)partition(1)] and NT path is [\Device\Harddisk1\Partition1].
2013-12-21 03:24:09, Info       [0x0606cc] IBS    LogBootDeviceInfo:The system boot device ARC path is [multi(0)disk(0)rdisk(0)partition(2)] and NT path is [\Device\Harddisk1\Partition2].
2013-12-21 03:24:09, Info       [0x0601c3] IBS    InstallWindows:Starting downlevel phase of Setup.
2013-12-21 03:24:09, Info       [0x0601c5] IBS    InstallWindows:Setting Working directory as C:\$WINDOWS.~BT\Sources\Panther
2013-12-21 03:24:09, Info       [0x0601ce] IBS    Setup has started phase 1 at 2013-12-21 03:24:09
2013-12-21 03:24:09, Info       [0x0601cf] IBS    Install source is C:\$WINDOWS.~BT\Sources
2013-12-21 03:24:09, Info       [0x0601d0] IBS    Build version is 6.2.9200.16384 (win8_rtm.120725-1247)
2013-12-21 03:24:09, Info       [0x06403d] IBSLIB CreateSetupBlackboard:Creating a new persistent blackboard. Path is [C:\$WINDOWS.~BT\Sources\Panther\SetupInfo] Setup phase is [1]
2013-12-21 03:24:09, Info       [0x090008] PANTHR CBlackboard::Open: C:\$WINDOWS.~BT\Sources\Panther\SetupInfo succeeded.
2013-12-21 03:24:09, Info       [0x064043] IBSLIB CreateSetupBlackboard:Successfully created/opened Setup black board path is [C:\$WINDOWS.~BT\Sources\Panther\SetupInfo]
2013-12-21 03:24:09, Info                  IBS    InstallWindows:No UI language from a previous boot was found on the blackboard. Using selected language [en-US].
2013-12-21 03:24:09, Info                  IBS    InstallWindows:Setup architecture is [x64]
2013-12-21 03:24:09, Info                         SetupSetVolume: Marking [C:\] for tracking as [TildeBTVolume]
2013-12-21 03:24:09, Info                  IBSLIB SetBTVolumePaths: BTSources folder path = [C:\$WINDOWS.~BT\Sources]
2013-12-21 03:24:09, Info       [0x0606cc] IBS    GetSystemPartitionNTPath: Found system partition at [\Device\Harddisk1\Partition1].
2013-12-21 03:24:09, Warning    [0x0606cc] IBS    GetSystemPartitionPath: Unable to find DOS drive path for system partition [\Device\Harddisk1\Partition1].
2013-12-21 03:24:09, Info                  IBSLIB SetSystemVolumePath:Could not find DOS path for system partition; looking for NT path...
2013-12-21 03:24:09, Info       [0x0606cc] IBS    GetSystemPartitionNTPath: Found system partition at [\Device\Harddisk1\Partition1].
2013-12-21 03:24:09, Info                  IBSLIB SetSystemVolumePath:Found NT path for system partition: \Device\Harddisk1\Partition1; assigning temporary drive letter...
2013-12-21 03:24:09, Error      [0x0601d3] IBS   
InstallWindows:SetSetupBBProperties failed.[gle=0x00000002]
2013-12-21 03:24:19, Info       [0x090009] PANTHR CBlackboard::Close: c:\$windows.~bt\sources\panther\setupinfo.
Any thoughts about this issue?
Thanks in advance!

Answer 1

2013-12-21 03:24:09, Info                  IBSLIB SetSystemVolumePath:Found NT path for system partition: \Device\Harddisk1\Partition1;
assigning temporary drive letter...
2013-12-21 03:24:09, Error      [0x0601d3] IBS   
InstallWindows:SetSetupBBProperties failed.[gle=0x00000002]
assigning temporary drive letter... 
I think the HDD has only 1 partition and Windows could not extract into another partition so, it hasn't reach the point where it can roll back