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FIM Troubleshooting: Portal Upgrade - The Web application at http://localhost could not be found

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Issue

When upgrading the FIM Portal the installation fails with Event ID 1603. A verbose log of the installer revealed an attempt to locate the FIM Portal at the address "http://localhost". See the snippet below:

Calling custom action Microsoft.IdentityManagement.SharePointCustomActions!Microsoft.IdentityManagement.ManagedCustomActions.SharepointCustomActions.VerifyClaimsAuthenticationOff
Property name = 'SHAREPOINT_URL', value = 'http://localhost'. 
Exception thrown by custom action:
System.Reflection.TargetInvocationException: Exception has been thrown by the target of an invocation. ---> System.IO.FileNotFoundException: The Web application at http://localhost could not be found. Verify that you have typed the URL correctly.
If the URL should be serving existing content, the system administrator may need to add a new request URL mapping to the intended application. 

Cause

The installer looks at the Alternate Access Mappings configured in SharePoint Central Admin. If the mappings are incorrect it will default to "http://localhost" as the SHAREPOINT_URL parameter for the install.  If you run into this error, make sure the Alternate Access Mappings are correct, and verify the proper protocol is used (http:// or https:// if you are utilizing SSL) in the URL.

Solution

Properly configure Alternate Access Mappings. The Final Guide to Alternate Access Mappings white paper can be found here and is a very useful reference. Simply adding an internal URL for 'http://localhost' will likely fix the problem and allow the installer to complete successfully.