OK finally got some time to return to this and wanted to update all on this issue. i tried the following things and it seem to fixed the issue. I did not have time to zero in on what fixed the issue.
1. Remove the ArcGIS folders(i had tried to remove them and install before so don't think this did it)
2. Turn of User Access Control on the server during the install
3. Remove all ArcGIS software from the machine and tried to install server on an empty machine.
Once i tried to install after this everything seemed to install fine and the service is running fine.
hope this helps someone facing the similar issue.