While upgrading SCCM 2012 SP1 to SCCM 2012 R2 for a recent client, I came across this issue where the installation continued to fail at “Copying Files” stage of the upgrade wizard, causing the upgrade installation to fail. Viewing the provided log file named ConfigMgrSetup.log indicated the error message, “ERROR: Failed to copy C:\SC2012_SP2_CONFIGMGR_SCEP\SMSSETUP\tools\CMTrace.exe to c:\program files\microsoft configuration manager\tools\cmtrace.exe, Win32 error = 5”

SOLUTION: First ensured the cause of the issue was not related to permission, I simply deleted the old cmtrace.exe from the above destination location, and retried the upgrade installation, and the upgrade was completed successfully.