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Although nobody answer my question, I will post my conclusion about this issue.
I was never able to recover the problem PC, I worked with SafeTech and WinTech but nothing the procedures work fine but in the end the same blank screen with the "Starting Operating System ..." message came up.
The McAfee Technical support told me that the problem stem from the fact that I checked all the file groups when creating the device group and installation set.
In the end I had to delete the original problematic device group and create a new one checking only the file group "Endpoint Encryption 5.1.7 Client Files", that is the only file group needed for the installation set process to end successfully.
I tested a PC with the new configuration and is working fine.
As far as the 61 character response code... if you set your machine/user key size smaller, it will shorten the required response code length. The smallest key size still results in a 17 character response code. I wouldn't get too crazy with key size for "normal" machines and users. You could set larger key sizes for "extra sensitive" accounts though, if you want.
I also had this problem on one laptop. I've found a solution in changing the following BIOS setting:
HDD Translation Mode from "Bit shifted" to "LBA-assisted". More technical information about these translation modes: http://www.dewassoc.com/kbase/hard_drives/drive_size_barrier_limitations_2.htm
I believe the setting that is causing your issue is the "EEPC51 Option: update the number of sides reported in the OS boot sector" file set. It has caused several of our HP laptops to display "Resetting Hardware. Starting Operating System" after the preboot authentication.
Also check the "enable bootdisk compatibility." option under General settings is a good idea.
To fix the issue without uninstalling try the command fdisk /fixboot using recovery console.