Yeah, it clearly is NOT a bug! Windows 7 has been out since 2009 and "bugs" like that have been ironed out long ago.
I would suspect (1) not an official Windows 7 or (2) incompatible hardware or (3) corrupt driver issues. While Safe Mode loads with limited
driver support, drivers are still being loaded, even if just basic native drivers. And the hardware Safe Mode encounters must be supported by those drivers.
The fact the OS resets during password entry, that suggests to me advanced driver settings are causing the problems - or at least that is where I would look first.
Different CPU types (ie AMD or INTEL) may or may not display an error message.
How was this determined? I note to test this, this OS installation would have to be installed to two different motherboards - which of course, would require two different sets of motherboard drivers. Not to mention that raises some licensing issues.