Do a fresh install of Qubes 4.2.0rc5. When it says complete, choose restart, then pull the USB install media.
The system may hang with this repetitive SQUASHFS read error. I’ve encountered this more than once, issue seems to be that it’s not clear when one should remove the USB drive. When it gets to the installation done restart prompt, pulling the USB drive prior to selecting restart may lead to the system quickly transitioning to being wedged on a black screen with a single underscore in the upper left hand corner.
Neither of these conditions is fatal. Power cycling the machine leads to a working Qubes install. This does seem to be Custom drive layout + BTRFS specific, I don’t recall seeing it when letting the system default to LVM.