Update on this issue:
This issue is likely as a result of trying to install and launch the game on different drives.
As a workaround,
1) you might like to try installing the game on the C: drive or :
2) follow the instruction from [Troubleshoot game installations on a Windows device | Xbox Support|https://support.xbox.com/en-US/help/games-apps/troubleshooting/troubleshoot-games-windows-10]
When installing a game from the Xbox app for Windows, you have the option to select the hard drive in which the content will be stored. If you see the “Selected drive is not set up to install games” message, it means your hard drive is not provisioned and installation access is denied. To fix this:
Open Settings on your device using one of the following options:
Select the link in the “Selected drive is not set up to install games” message
Select the Search icon on the taskbar, type settings, and then select it from the list
Select System > Storage, and then select Change where new content is saved under More storage settings (Windows 10) or Advanced storage settings (Windows 11).
Under New apps will be saved to, choose the drive to which you want to save the game content.
When attempting to install Minecraft for Windows (Bedrock) in the Minecraft launcher, after selecting the installation location, it immediately displays "Error" in the download progress bar and then nothing else happens. No additional error information is provided. Cannot pause or cancel the installation.
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I also have this problem since yesterday. The version didn't want to update in the new launcher so I uninstalled it and tried to install it again but no luck so far. after the error the launcher seems to still work besides the pause or stop button. but when I close it down it is still active in the background and cant be reopend until it is shutdown via taskmanager.
[media]I have tried to install it on different drives as suggested, but it does not seem te make a differents. I still get the same thing whether or not I pick drive C:
I have tried the storage settings work around.
The first thing that happend is dat I could not chose the drive that I had selected in de storage settings.
after another restart I could again chose between my two drives. but I still got the error in the loading bar.
Follow the instructions on [Troubleshoot game installations on a Windows device | Xbox Support|https://support.xbox.com/en-US/help/games-apps/troubleshooting/troubleshoot-games-windows-10] under section "Still having problems?" appears to have resolved the issue for me.