I had a cdrom repo that was unreachable on a Ubuntu 16.10 server machine. This caused tl-setup to fail.
> Resolving packages and dependencies... failed.
> Failed to resolve required packages and dependencies.
> 2017-01-31 06:52:34,906: Resolving packages...
> 2017-01-31 06:52:36,673: failed to resolve packages with reason: E:The repository 'cdrom://Ubuntu-Server 16.10 _Yakkety Yak_ - Release amd64 (20161012.1) yakkety Release' does not have a Release file.
> 2017-01-31 06:52:36,674: Failure resolving packages.
While normal installation and upgrades using apt worked perfectly fine, I had to manually disable the repo (remove from /etc/apt/sources.list) in order for tl-setup to work.
Fixed now - reproduced the error and later verified the fix on Ubuntu 20.04 using the following line in '/etc/apt/sources.list':
deb cdrom:[Ubuntu-Server 16.10 _Yakkety Yak_ - Release amd64 (20161012.1) yakkety Release]/ focal main
Reproduced with 4.12.1 on Ubuntu 20.04 with the same modifications to 'sources.list' as described in comment #2.
Looks good now with build 2047!