You may encounter this error when attempting to upgrade from Windows Vista to Windows 7. When the upgrade process begins, you will receive the error and you will not be able to carry out the upgrade.
Tip: Solution if Windows Setup experienced an unexpected ...
If you receive this error, your upgrade will abort, and the system will tell you to restart the installation again. The solution may be quite simple. Take out the installation CD and check it for scratches. Use a standard disc cleaner and a soft cloth—a bit of dust on the disc may prevent it from working. Re-insert the disc, and attempt the installation again. If you still receive the error code message, find your old Vista CD and insert it—and then select the Repair option. It is possible that there is a corruption within Vista that is not allowing the upgrade. The Repair option will repair any errors that may exist, which may be preventing the upgrade from occurring. After running Repair, then attempt the upgrade again. Finally, if that still does not work, do a complete install of Windows 7 as opposed to an upgrade.
TipFor more information, please see: How to fix Update error #0x583