I had this problem on an OEM Dell setup, just bought. It was a problem with the account created during Win8 setup.
Found a solution here:
http://superuser.com/a/696868/3560
which worked for me. I had tried wsreset.exe without effect. To quote the solution above:
"1) Check your user privileges: Windows key + r key (Windows +R) --> opens the run window
- Type/copy: control userpasswords2 (press enter) --> open user accounts window
- double click your user or select your user and click properties, click
Group membership tab, check if the radio button is
on administrators"
User was listed as a member of HomeUsers and Administrators, but when I edited the user priveleges, radio button was not set for Administrators. I set that, and could immediately install 8.1 without the error. No need to install or re-install any KBs.
All credit to user xilolee above.
I would like to join in being unimpressed at MS quality control lately, and disappointed that a newly purchased laptop still had 8.0 at this late stage. Also unimpressed with the 8.0 UI; I had thought to look for the user priveleges to check them, but I
couldn't find them!