During the Software Update installation step however, the following error message was displayed:
-Failed to RefreshUpdates, hr=0x87d00272
-Failed to run the action: Install Software Updates. Component is disabled. (Error: 87D00272)
Trick is, someone changed the Default Client Settings policy, and set "Enable software updates on clients" to No. Therefore software update scan, download and install cannot take place. Long story short, change the policy back to Yes, and start build and capture again.
Hope it helps!
Download software updates working again!
Install software updates working again!