look up 'perform a clean boot' for upgrading... turn off local progs in msconfig, disconnect all usb devices, unplug internet, reboot... then run your upgrade ISO or USB

I had that error as well and had to use Microsoft's Media Creation Tool to get it to install without error. Yes, the default configuration was to keep all your existing data and user files.

I had no error message but here is my experience. I downloaded the anniversary update installed it then had to restart my PC. During restart and into the process about 20 minutes it a was about 5AM in the morning and my electricity in my apartment shut on and off! You know, when your computer say please don't turn off your computer right now? Well it did. Happy anniversary! hehe so i restarted and I was really lucky! Built into the update was auto restore to previous Windows version. I really did not have to do anything, it took me back to my old Windows 10 before the anniversary update. I ran windows update, it downloaded again, installed again and I had to restart. This time the electricity did not fail but it took a long long long long long long long long long long long long long long long long long long time. :) once I got to Windows the anniversary update had installed and was fine!
 
But yesterday my computer simply lost contact with my sound card. Cakewalk could not detect my Roland quad capture audio interface. I tried lots of stuff. I could go into about 20 things I tried but the thing that worked was  deleting my quad capture driver in device manger and letting Windows install them again with a restart. Sound came back!
 
I do like the anniversary update especially Cortana just enable her and say "take a note" she asks what's the note you tell her and she puts your note into one note. This I find handy. Then say "open onenote" and choose which onenote to use. 

TBH, after going through the list of whats in the update, I think I will give it a big miss. None of the stuff really interests me. It seems Cortana and Edge are the "big ticket" updates and as I use neither, I can see no real reason to change things. This is assuming I continue to get "regular" updates without being forced to take the Anniversary one, and at this stage this seems to be so.

Might be worth mentioning that the update may also reinstate any previously disabled audio drivers such as onboard sound cards. Check device manager and disable them again.
I have to do this virtually every time I get a major update