Direct collapse within dark matter (DM) halos is a promising path to form supermassive black hole (SMBH) seeds at high redshifts. The outer part of this collapse remains optically thin, and has been studied intensively using numerical simulations. However, the innermost region of the collapse is expected to become optically thick and requires us to follow the radiation field in order to understand its subsequent evolution. So far, the adiabatic approximation has been used exclusively for this purpose. We apply radiative transfer in the flux-limited diffusion (FLD) approximation to solve the evolution of coupled gas and radiation, for isolated halos. For direct collapse within isolated DM halos, we find that (1) the photosphere forms at ~10^{-6} pc and rapidly expands outward. (2) A central core forms, with a mass of ~1 Mo, supported by thermal gas pressure gradients and rotation. (3) Growing thermal gas and radiation pressure gradients dissolve it. (4) This process is associated with a strong anisotropic outflow, and another core forms nearby and grows rapidly. (5) Typical radiation luminosity emerging from the photosphere encompassing these cores is ~5 x 10^{37}-5 x 10^{38} erg/s, of order the Eddington luminosity. (6) Two variability timescales are associated with this process: a long one, which is related to the accretion flow within the central ~10^{-4}-10^{-3} pc, and ~0.1 yr, which is related to radiation diffusion. (7) Adiabatic models have been run for comparison and their evolution differs profoundly from that of the FLD models, by forming a central geometrically-thick disk. Overall, an adiabatic equation of state is not a good approximation to the advanced stage of direct collapse, mainly because the radiation in the FLD is capable of escaping due to anisotropy in the optical depth and associated gradients.