Issue

Trying to upgrade an existing Windows 8.1 Pro installation to Windows 10 Technical Preview (build 9926) (via Windows Update). After Windows Update downloads installation files (over 2GB), the upgrade begins, but soon after it fails with error:

Modern Setup Host
Modern Setup Host has stopped working
A problem caused the program to stop working correctly, Windows will close the program and notify you if a solution is available.

Windows Update would show that the update failed and try to repeat the process (with the same results). Windows system and application logs did not provide any clues.

Cause and Resolution

After a bit of digging it appeared that the issue was caused by a lack of space of the system’s C: drive. There was around 10GB of free space, but it seems that Windows 10 upgrade actually requires around 16GB.

After freeing another 10GB, installation went ahead without any issues.

03.2015
Windows 8.1 Pro 64bit
Windows 10 Technical Preview 64bit