Wow. I tried the troubleshooter. Did not fix the issue. I tried to rebuild the update catalog. Ran into permissions issues even when admin and didnt want to play around with that. Besides all those steps would make one certifiable.
Keep in mind this is a reinstall from the latest Windows 10 20H2 ISO where I tried 'keep nothing' and I also booted and deleted the existing disk partitions.
One possible fix is that now the WIndows updates are 'asynchronous' but you need to wait. You get the silly 'restart' button but Windows Updates are still downloading and installing. So I waited for everything to finish before a restart. I did this before. But for some reason when I did it now it worked. There seems to be some dependencies with KB2267602 and others in the install order. Maybe MS addressed this today?
It is rather disheartening that on a fresh reinstall this type of issue would come up. Right now I am leaning towards the problem being an install timing / dependency issue. As such all of the above suggestions are of less help as this is appears to be a Microsoft issue.
Here is what the list of updates for Win10 20H2 look like on a clean reinstall: