Symptoms

Diagnoses

Resolution

The "Subscription Settings service application" and proxy have not yet been configured to support the configuration of the App Domain URL and Apps in general. As such:

1. Configured the "Subscription Settings Service Application" and "Subscription Settings Service Application Proxy"
https://technet.microsoft.com/en-us/library/fp161236.aspx

2. Configured the User Profile Service and User Profile Sync Connection Task.

3. As K2 was previously configured for HTTPS, you will either need to configure Sharepoint to use HTTPS (or reconfigure K2 to use HTTP), as per the "SSL requirements" section:
http://help.k2.com/onlinehelp/K2ForSharePoint/ICG/4.6.10/default.htm

4. Configured the App Domain URL (usually in this format apps-12345678ABCDEF.ContosoApps.com) after making this configuration, you should be able to "ping apps-12345678ABCDEF.ContosoApps.com" the "12345678ABCDEF" can be reused but the App domain and App Prefix should be specific to your environment. As per:
https://technet.microsoft.com/en-us/library/fp161236.aspx

5. Open Port "6332" between the Sharepoint Server (where you are running the appdeployment.exe") and the K2 server, as per:
http://help.k2.com/kb001672

6. Make sure that the account running the "appdeployment.exe" have the following permissions and is a non System Account as per the "Permissions for Installing K2 for SharePoint in the App Catalog" section:
http://help.k2.com/onlinehelp/K2ForSharePoint/ICG/4.6.10/default.htm

We also had to add SPShellAdmin for the account running the appdeployment to the App Management Content database, with query below:

$contentDBId = (Get-SPDatabase | ?{$_.Name -eq "App_Management_Server_Guid"})
Add-SPShellAdmin -UserName {DOMAINUserName} -database $contentDBId

7. Configure metadata and oauth over HTTP using Sharepoint Powershell:

$c = Get-SPSecurityTokenServiceConfig
$c.AllowMetadataOverHttp = $true
$c.AllowOAuthOverHttp= $true
$c.Update()

8. When running the App deployment wizard, it was failing to register the Sharepoint 2013 service instance. When attempting to register a new Sharepoint 2013 service instance via Smartobject Service Tester tool, it throwing an error that it could not load the assembly "SourceCode.SmartObjects.Services.SharePoint.dll". Repairing the "Sharepoint Client Components" via "Program and Features" resolved this assembly load error.

For future installations, I would also like to recommend K2 Remote Services if you would like assistance in make these configurations. K2 Remote Services is an additional service offering which can be engaged, for an additional fee. K2 Remote Services gives customers K2 consulting expertise on an ad hoc, as-needed basis. Time may be scheduled in one-hour increments and charged through Premier support credits. K2 Remote Services is provided by phone, web conference or email. If you wish, I can contact your Customer Account Manager regarding your interest in this service.