After Sierra install, message appears saying install failed, Hold down D for Diagnostics My friend just tried installing Sierra on a blank internal hard drive in an iMac 21" 2010 (model iMac 11,2), using a bootable installer on an external USB drive. 

Seemed to install successfully, then rebooted, with a message saying the install had failed and advising: Shut down, turn on power, hold down D for Diagnostics. 

Holding down D does not actually activate any diagnostics.

Any idea what might be going wrong, or what to try next?

When trying to run in Safe Mode, this screen appears.
The error means that the file /sbin/launchd does not exist. The file is an important system component of macOS which is responsible for starting all other programs. Basically without it you cannot boot your system.

Normally this would mean that something has very seriously failed during the installation of macOS.

I would suggest reinstalling macOS while paying very close attention to any error messages that popup during installation.

If problem persists, consider the possibility of a hardware error such as a disk failure.