I have been in the exact same position as you. Now what I did might not be the recommended action but it worked.
I un-installed the USB adaptor whilst I was still on-line. For some reason it works, I was getting the same error message every time I tried to remove the device.
The mission should you choose to accept it is to leave the USB plugged in and log on, go to device manager and remove the USB converter blah blah. Then shutdown the machine with the USB still plugged in. Unplug the USB and restart, run the installation disk again and it should get past the problem with "you have to remove or disable" section.