By starting the update using the command line, I was able to bypass the secure token/owner check from the Software Update pref pane: sudo softwareupdate -i -a -R -i Install -a All appropriate updates -R Automatically restart (or shut down) if required to complete installation)

A little googling on OpenDirectory error 5103 and the fact that another machine updated from Beta 1 to Beta 2 without issue led me to find the difference. If the machine has a secure token (Run sysadminctl -secureTokenStatus <username> and you will either get "Secure token is DISABLED" or "Secure token is ENABLED") then the update works as expected. Without a secure token, the update fails. Both machines don't have FileVault enabled. It's unclear how one machine ends up with a secure token and the other without. I couldn't find a definitive solution for getting a secure token, so I'm really hoping this is something Apple will fix.