Microsoft reports that 12% of PCs are experiencing the installation problem. According to the company the issue is result of two bugs:

Instructions

Because this is a technical release and a new build is coming at the end of January 2015, Microsoft will not release a revised of the update. However, the company is issuing an official workaround: On PCs have had system compression enabled, an additional bug with how the file system tracks deletes caused the installer to think that the temp files failed to extract correctly, so the installer fails because it thinks it cannot complete.

  1. Restart your PC
  2. Open Command Prompt as an Administrator and run:
  3. Immediately afterwards run Windows Update and Check for Updates
  4. Go to Windows Update and install KB3020114
  5. Restart when prompted Microsoft says is working to fix these two bugs and make sure no additional problems block hotfix to install in coming releases of Windows 10. Source Microsoft All content on this site is provided with no warranties, express or implied. Use any information at your own risk. Always backup of your device and files before making any changes. Privacy policy info.