I think grey screen instead of select profile directory is result of
inocrrectly configured TEMP directory.
Try to add this at the very begining of setup.bat:
echo Just test>%TEMP%\testtemp.!
if exist %TEMP%\testtemp.! goto continue
echo Warning ! Your temporary directory is set to %TEMP%, which is invalid.
echo (tip: temporary path must exist and must not end with \ )
echo During setup, TEMP directory will be temporarily disabled, but you
echo modidy your AUTOEXEC.BAT file to point TEMP to existing directory
echo (preferably on your RAM disk).
echo.
pause
:continue
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