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Unable to create Windows 7 virtual machine

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I am trying to virtualize a Windows 7 machine (Hostname = ESI) that has exactly 1 application running on it. Using Disk2vhd v2.01 I am successfully creating a Vhdx file. The Windows 7 machine only has a C drive and a Recovery drive so I'm doing the copy of both filesystems to a remote file system on the server where it will run.

Opening the Hyper-V Manager I attempt to create a new virtual machine and I get the following error (from the Event Log):

'ESI' Microsoft Emulated IDE Controller (Instance ID 83F8638B-8DCA-4152-9EDA-2CA8B33039B4): Failed to Power on with Error 'The requested operation could not be completed due to a virtual disk system limitation.  On NTFS, virtual hard disk files must be uncompressed and unencrypted. On ReFS, virtual hard disk files must not have the integrity bit set.' (0xC03A001A). (Virtual machine ID FFEDD93B-40B2-4957-A488-CA3E19636012)

The C drive on the Windows 7 machine is not compressed or encrypted. Both servers are using NTFS filesystems.

Windows 7 Professional machine is a Dell Vostro 2705 with an I3-3220 CPU, 64 bit

The server where I'm migrating to is running Windows 2012 Standard, 64 bit

The Vhdx file is just under 56GB and he drive I'm putting it on has 6.85TB free

Does anyone have any ideas as to why I'm getting the failure?


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