Try to run update with administrator rights.
If the update still fails, you can manually start the service after the installation starts and before step 6.
You can also use administrator rights to run a script to monitor and start this service during installation(Run this script before installation, stop it after installation):
While (1 -le 2){Sleep 1; Get-Service | Where { $_.DisplayName -eq 'Microsoft Exchange DAG Management'} | Set-Service –StartupType 'Automatic'}
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