I have installed Experience Builder Developer Edition 1.16 on two machines a development machine and a production machine. I had some issues on the production machine installing some widgets so when I went to delete the folder and start over I was greeted with the attached error. It seems like there's new new file paths beyond Window's limits. Just throwing this out there, my development machine had long file paths enabled, so once I can restart my production server I'll test my theory. But it might be a good idea to make sure you have long file paths enabled before deploying 1.16.
Here is one example. This does not exist in my 1.15 deployments.
E:\arcgis-experience-builder-1.16\ArcGISExperienceBuilder\client\node_modules\@arcgis\map-components\dist\types\data\arcgis-web-compoments\actions-runner-1\_work\arcgis-web-components\arcgis-web-components\packages\map-packages\map-components\.stencil
Edit: long file paths is already enabled on this Windows Server.