The same here on a brand new M1 Macbook air. After migrating from the old macbook air, the new macbook refused to take the "old" password to log in. We even considered wrong keyboard layout (qwerty vs azerty) so we also tried example password: "word", so we also tried "zord". No matter what we tried, the correct password was denied! When trying to reset the passwordt, we got to the screen that said "deactivate macbook". We did not click that! So we had contact with apple support and they let us reinstall Big Sur. After a while of installing this error is where we are now. After trying "again", again the same error message. What I'm trying to do next is "install from time machine". There was no time machine backup from the old macbook air, so I'm waiting for it to finish and the I'll try that way....

It did not take the time machine backup! "You have to use migration assistent to restore from this backup" :(. Deleted the SSD, and now installing again: 1- with the powercord installed, 2-made sure the right keyboard is selected in the right top corner! I'll report back when finished, still 52 minutes to go... Oh, wait, just now as I'm writing this :( :( :( ERROR: Failed to personalize the update. Please try again. Anybody ??