Windows 10 fails to update to 2004: appid.sys crashing in "FirstBoot"

New Lenovo T14 (20UD002HMX) has problems updating to Windows 10 2004. Everything seems to be going well until the computer states "Undoing changes made to your computer" and I'm back to 1909.

I used SetupDiag and found the problem:

BugCheck Code: 0x0000003B 
Driver: appid.sys 
SetupPhase: FirstBoot,Start

Is anyone familiar what could be causing this issue? We have other Lenovo T14 which didn't have any problems updating to 2004.

Updated:

Checked the bug code from here and it seems to be: INVALID_AFFINITY_SET.

Target OS Build is the following: 10.0.19041.568 (vb_release_svc_prod1.200929-2208)