With this option on, did miktex ask you to install some package? If no such dialog appear (meaning miktex has everything inquired), and configure.py still fails, it will be configure.py's fault.
It is definetively not configutre.py's fault. It's this MiKTeX problem:
Usually this option is changed to 'install one the fly' so missing packages are installed automatically. Then, things can go wrong if miktex failed to download a package.
it also failes when 'ask me first' is set 'install one the fly' instead of But we are working on this. Workaround: Open an internet connection and reconfigure LyX. regards Uwe
