Hi Yanai,
Welcome to Microsoft Community.
I'm Hahn and I'm here to help you with your concern.
It sounds like your Surface Laptop 7th Edition is encountering a significant issue during the installation of the cumulative update for Windows Insider build 10.0.26120.1542 on ARM. Overheating and unresponsiveness, especially during an update, can point to a few possible causes related to either the update itself or hardware-related issues. Announcing Windows 11 Insider Preview Build 26120.1542 (Dev Channel) | Windows Insider Blog
If the update is causing severe issues, consider pausing the Windows Insider updates until the issue is resolved by Microsoft. This will prevent your device from attempting to install the problematic update repeatedly. Go to Settings > Windows Update > Windows Insider Program and select the option to pause updates.
The problem may be related to ARM-specific bugs in this Insider build, and you may need to wait for Microsoft to issue a patch or hotfix.
Microsoft attaches great importance to user experience, you can submit your ideas and suggestions through the Feedback Hub, and the development team will regularly review submissions for ideas or fixes. Send feedback to Microsoft with the Feedback Hub app - Microsoft Support
Please share the feedback link here after submitting as it will allow others on the forum to vote for your submission, including me. More votes will lead to more visibility and higher priority to the development team.
I hope this helps. If there is anything not clear, please do not hesitate to let me know.
Your Sincerely
Hahn. W - MSFT | Microsoft Community Support Specialist