I had this same problem, and after reading your advice, I got passed it by going through setup without a network connection — but I couldn’t find a way to forget a known network from within the setup process. So if anyone else is similarly stuck, try this:
Stepping backwards the setup process until it brings up the wifi selection screen. Change the settings on your existing network (such as the password) such that it no longer functions — this may require selecting the “show all networks” or similar message, because when I tried it from the initial wifi selection screen, setup proceeded and remained connected, despite having a bogus password.
Anyway, if you get get through the setup process without a network connection, it seems to work.
And this is probably BLU’s fault, as the problem seems to be with their email newsletter signup screen, which of course is not part of the built-in android setup process.