Your DISM failure is no longer about missing source files. The log shows DISM cannot spawn dismhost.exe at all. When the servicing host process cannot launch, every DISM operation fails immediately with 0x80070002 regardless of source. That isolates the fault to the OS environment, not the update payload.
A servicing host launch failure is triggered by one of four conditions:
The dismhost.exe binary or its manifests are damaged or mismatched. They reside under C:\Windows\System32\Dism and WinSxS. Even if SFC reports no violations, it can miss component store breaks in WinSxS identity metadata. This prevents COM activation of the servicing host.
Permissions on %windir%\Temp or the user Temp path have been altered. DISM attempts to stage its host under your user temp directory. If ACLs are wrong, the host can't be created and returns 0x80070002. Verify that the user profile’s Temp and the system Temp directories grant full access to SYSTEM, Administrators, and your account.
A third-party security product, including endpoint protection, anti-tampering modules, or sandboxing tools, is blocking process creation of dismhost.exe. These products hook process creation and frequently interfere with DISM specifically. Temporarily disabling or uninstalling them is the only way to rule this out; disabling via UI is sometimes insufficient because kernel drivers remain active.
Corruption or misconfiguration inside the Component Based Servicing (CBS) stack. When CBS’s internal registry hive or servicing stack files are damaged, DISM fails at process initialization before any image work starts. This is the same layer that Windows Update relies on, which explains both the update loop and the DISM failure.
You can't repair this system from inside the running OS because all repair tools depend on CBS and dismhost.exe. The only viable recovery path is an in-place repair installation launched from outside the corrupted servicing environment.
Boot from the Windows 11 installation media you already downloaded. Choose “Repair your computer”, then run Startup Repair once to clear boot and servicing metadata. After that, boot normally into Windows and start setup.exe from the mounted ISO to perform an in-place upgrade. When setup runs from full boot and not from WinRE, it bypasses DISM’s local host creation and uses its own servicing stack packaged in the install media.
If setup launched from inside Windows still fails, you have a CBS registry or WinSxS identity corruption so severe that only a clean install can reestablish a functional servicing stack. In that state, no command-line repair, no DISM source override, and no troubleshooter can succeed because the servicing host itself cannot be instantiated.
Proceed directly to the external in-place upgrade. If that cannot initialize, perform the clean installation.
VP