I managed to find the solution.
Basically, the issue is with the usb qube, so to fix, all I did was untick the box that said, "Use a qube to hold all USB controllers (create a new qube called sys-usb by default)
Then the installation succeeds.
After a little trial and error, I managed to create a USB qube that works on my desktop.
Using lsusb in dom0, I made sure that both my USB keyboard and USB mouse are plugged into the same controller (Bus 005 in my case).
Then create the USB qube with:
qubesctl state.sls qvm.usb-keyboard
(completed with no errors)
Find the BDF as described here:
http://qubesosfasa4zl44o4tws22di6kepyzfeqv3tg4e3ztknltfxqrymdad.onion/doc/usb-qubes/#qubes-41-how-to-enable-a-usb-keyboard-on-a-separate-usb-controller
(in this case my BDF was 07:00.4)
Use Qube Manager to edit sys-usb settings (without launching sys-usb)
In Devices tab, remove 07:00.4
(For me, this was the missing ingredient causing me to lose keyboard and mouse when starting sys-usb, this post clued me in to the solution: Broken system after installing USB qube - #37 by DVM)
In dom0, edit /etc/default/grub like so:
GRUB_CMDLINE_LINUX=“$GRUB_CMDLINE_LINUX usbcore.authorized_default=0 rd.qubes.dom0_usb=07:00.4”
Then
grub2-mkconfig -o /boot/grub2/grub.cfg
Reboot, unt voila!