Cygwin setup.exe fails during upgrade

Like Ruben, who provided the clues, I discovered that a corrupt/incompatible alternatives.lst.bz file in the C:\cygwin\etc\setup directory caused Cywin setup.exe to fail.

A few clues pointed to this file as the culprit:

1. First time through, the installer complained that some other Cygwin process had locked the readme file
2. the installer just looped indefinitely on extracting the README file from alternatives.lst.bz until I killed it
3. The only .bz file in C:\cygwin\etc\setup with today’s date was alternatives.lst.bz.

Here’s what the log file recorded, for several thousand lines:

2009/05/04 11:01:23 io_stream_cygfile: 
fopen(/etc/alternatives/README) failed 13 Permission denied
2009/05/04 11:01:23 Failed to open 
cygfile:///etc/alternatives/README for writing.

I renamed the file to alternatives.lst.bz.bak , then reran setup.exe to successfully upgrade Cygwin.

Now I suppose I should log a bug report…