Glad to know you were able to work around this issue by restoring from your old backup. I experienced the same issue on my late 2008 MacBook, when trying to install El Capitan. Was stuck in the same loop you described. Tried installing at least 3 times and got the same error message each time.
Eventually, in a moment of desperation (because, at the time, I thought Time Machine hadn't backed up my data successfully since June), I inserted a thumb drive that had a clean installation of OSX Mavericks on it. I wasn't able to boot up from that thumb drive, but somehow after inserting it and seeing in Disk First Aid that the thumb drive was mounted, the El Capitan installation proceeded successfully.
I have no idea if there's any correlation between inserting a thumb drive and El Capitan's successful installation, but that did appear to be a coincidence in my case if nothing else. A happy coincidence.