Replying to an aging thread since I just ran into this with my Macbook Pro 2017...
I have not used this laptop for some time and it was on 11.1.1 when I signed into it so I updated to the latest 13.x... of course this then caused the aforementioned loop of errors that I could get around (eventually, by retrying the connection and download of the firmware update). However, each subsequent reboot would present the same error. Booting in safemode would avoid the error, but the system is generally too slow to be useable for working in...
So, deciding I wanted the latest version of MacOS Sequoia anyway (which Apple does not support directly), I used OpenCore Legacy Patcher and upgraded the OS. Once that was complete, my problem (assumed to be the touchbar firmware update process) went away and the laptop now works perfectly fine, including reboots.
Just wanted to put out there that, for me, this problem was solved by using the legacy patcher to update to Sequoia. Good luck all!