M1 Mac clean install, getting stuck at "Create a computer account"

I wanted to do a clean install on my shiny new M1 MacBook Pro, running macOS 11.1. I booted into recovery mode and navigated to disk utility, click my Macintosh HD entry, erase, then erase volume group.

Reformatting done, I selected "Reinstall macOS Big Sur." This progressed normally, and I was eventually greeted with setup assistant, asking me to select a language.

Everything works normally, up until I reach the "Create a computer account" dialog. No matter what information I enter here, the setup assistant freezes for 5-10 minutes [1]. It eventually reports that creating the account failed, with no further information. It asks me to try again - if I try to use the same short or full account name, it complains that the short or full name is in use and to select something else. If I change the full and short names and try again, the same thing occurs.

If I forcibly shut down the machine at this point and reboot, I am greeted with a normal login menu - e.g. no setup assistant. The accounts that I tried to create using the setup assistant are all listed, but I am unable to log into any of them - seems the password might be set to something other than what I specified.

If during the setup process I signed into iCloud (I have tried with and without signing in), I am given the option to reset the account password using my iCloud account - but this does not work, it shakes a bit as if the iCloud password is wrong. (The iCloud password works perfectly fine on another machine.)

I would write the whole thing off as a glitch, but it is 100% reproducible (on this machine, at least - I am afraid to try my existing machine for the moment). That is, erasing the hard drive and restarting the entire process results in the same errors. If there was a hardware issue, doesn't it seem more likely that we'd run into different set of problems each time?

So, wall of text finished: has anyone run into this, or have any advice on debugging?

I am on attempt 5+ at the moment.

[1] I can still bring up the Force Quit dialog, and adjust brightness/etc using the Touch Bar.

Use the other machine, you indicate that you have, to restore the M1 MacBook Pro M1 fully.

You can find Apple's instructions on doing that here:

https://support.apple.com/en-gb/guide/apple-configurator-2/apdd5f3c75ad/mac

It consists of the following steps:

1. Install Apple Configurator 2 on your working Mac.

2. Connect the two Macs using a USB-C cable. On the non-working MacBook Pro it needs to go into the left-hand side port that is nearest the back of the Mac.

3. Run Apple Configurator 2

4. Put the non-working MacBook Pro in DFU mode by pressing the power button and holding it down and simultaneously pressing and holding the right shift key, the left option key and the left control key - all for 10 seconds.

5. After 10 seconds release all keys except the power button.

6. The MacBook Pro should now appear in Apple Configurator 2. Select it and click Actions > Restore.

After the restore process is finished, you can setup macOS as normally - including the user accounts and passwords.

paraphrasing @Remiks' answer (thanks Remiks - your writeup got me unstuck!). Remiks reports:

Apple Support shared a far easier fix using recovery tools

upsides over the published approach:

• requires no 2nd machine or external drive
• requires no new software (just the Mac OS already on your machine; no downloads of any kind)
• works reliably (whereas Apple support warns configurator 2 is flakey)

Crazy idea, but should these become the official steps? Anyone aware of a situation actually requiring Configurator?

steps to follow:

1. shut down your computer
2. remove the computer from any iCloud accounts (thanks for the edit, @abbaf33f)
3. hold the power button until the "options" icon shows
4. select the "options" icon
5. when next screen loads, select menu item to launch terminal
6. in terminal type "resetpassword" and hit enter
7. when a reset password box appears, reveal a new menu by clicking somewhere off to the side of the reset password box (thanks for the edit, @brendan-duke!)
8. select "Recovery Utilities" then "erase Mac"; in new pop up confirm option to erase Mac
9. once erased, exit back to recover
10. reinstall the operating system
11. once installed, create the account.

Remiks' reported result matches mine: this fix works on the first try.

On the other hand, the official apple steps failed repeatedly for me, and two Apple Sr. Advisors warned me as they attempted to assist that the published instructions were unreliable (yep, they were also frustrated that the Apple-supplied steps failed try after try).