This particular tidbit of information may seem obvious enough however
unlike in virtual PC where the option is front and center, in virtual
server you must dig a little to locate this option.
As in virtual PC,
this option is "System Specific" meaning if the system has more than 1
vhd well, the option applies to the system. In the case of clusters,
you must ensure the option is disabled on all nodes in the cluster.
The error message that comes up in virtual server is not obvious in
showing what the issue is.
The error essentially references the fact
that the type of vhd file being used is not fixed and when using the
inspect feature of virtual server, one discovers this is NOT the case..