Computer Account Creation Failed Error in M1 Mac
After spending hours I finally figured out how to get around this. Apple...this is NUTSO. You should have this fixed.
My only guess...I was setting this up for my neighbor who was replacing his 15 YO Mac, and his ID was not set up for 2 factor authentication...my guess is that's what locked him...but it's just a guess.
1) wipe hard drive
2) reinstall Big Sur
3) When restarting, DO NOT connect to WIFI
4) Do not register an Apple ID
That gets past the error, then register the apple ID.
This video was what finally solved this for me: