Let’s break this down a bit. Windows for Arm is a bit of a weird area for lots of things right now - in fact, it’s so much a weird area that Microsoft doesn’t actually provide licensing for running it as a VM. There might or might not be a licensing exception for Arm based devices originally sold with Windows but that doesn’t matter in this case.
So with that in mind, I’m not sure which Windows for Arm VM image you are using but I would wager you are using Parallels to run it on an M1 based Mac. That might matter in terms of who you should reach out to for support for this issue… I’m genuinely curious how much support Parallels will provide you on it so if you go that route, post an update.
I’m shocked the installer runs to start with but I’m guessing either the checks for architecture are being bypassed or they aren’t being run. I’m also going to guess that the box for disabling fast startup is being left checked, which is what is ultimately causing this issue. It’s the only thing that I’m aware of in the installer that touches anything to do with startup… though there could be something else buried in the bowels of the installer - I haven’t ever stopped to pick it apart and examine every file it touched. You can try running the installer and leaving that box unchecked to see if it completes but I would wager you’re still going to run into issues.