>Is this the best practice to install a test exchange on an existing network?
What a question, NO
If you really plan installing a live server, it does not so much care as all AD related settings have to been made anyway. But I you decide against EX, you have also to clean the AD again.
>Will it be easy to setup another server with exchange if we get this approved?
Usally yes. All domain changes (AD, org name etc) can left as they are. To move exchange within a domain is quite easy. To move an exchange from one domain to another is effort. If you plan to take over the test server into production, it maybe easier to install it into an live domain, but more work, if you decide against it.
I would install exchange first into a test environment for the first decision step, just to see, if it meets your needs. If you decide, that you want to make a more detailed test, you can later install a second test server into the domain, to avoid the moving trouble.
Error: From my point of perspective, the only error you have to fix is:
A reboot from a previous installation is pending. Please restart the system and rerun setup.
I rebooting do not help, there may be hanging something around from an earlier setup.
All the other items says, what is to do.