FOLLOW THIS EXACTLY TO FIX THE SETUP FILES NOT UPDATING, THIS IS A NEW METHOD TO FIX IT. (Tested on Windows 7)
I think I found a solution that should work for everyone. This is exactly what I did and it'll pull you through the updating setup files problem of installing Diablo 3.
1. Make sure agent.exe isn't running in task manager.
2. Delete your C:/ProgramData/Battle.net Folder
3. Right click your Diablo 3 Installer.exe thingy, Set the compatibility to Windows XP (Service Pack 3).
4. Now right click your Diablo 3 Installer.exe and click "Run as Administrator"
5. Now wait, it should freeze at 90% after a minute or 2.
6. Once it's stuck at 90%, go to your C:/ProgramData/Battle.net Folder, then go into your agent folder, and then into the Agent.954 folder.
7. In here, right click Agent.exe and click "Run as Administrator"
8. Now wait and it will finish updating the setup files.
Also just a side note, some people get stuck at 0% while installing the game after making it past the "Updating Setup Files" bug. Here's how you fix this bug, then you're home free.
1. End agent.exe processes (all of them)
2. "X" out of the installer
3. Now go back to Agent.954 folder and right click Agent.exe, run it as administrator
4. Now go back to your Diablo 3 Installer.exe thingy, right click it, run as administrator.
5. Click install and wait, it will sit at 0% for a bit
6. Then it should start installing and you'll finally be done with the bull crap.
Hope this helps <3
I have literally been playing around with this all !@#$ing day and THIS is the only post in this forum that has worked for me. I urge anyone who is frustrated beyond belief to try this!