Microsoft SCE (System Center Essentials) Installation fails with 1603

When you Run Microsoft System Center Essentials setup. Everything goes fine and smooth until it throws you a screen mentioning that the setup has failed.
When you view the log file, you notice error 1603.
What I did to solve error was, Uncheck the checkbox during setup which says "Use microsoft update..."
When the setup fails to connect to Microsoft Update, it throws above error.

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