If you have received the error:
“The server encountered an error while creating <virtual machine name>”
When creating a new virtual machine or trying to add a new virtual machine from existing VHD, where there is no reason given for the error other than “Creating the virtual machine failed”.
You will find that there is a lack of info on Google relating to this, as most users would have had a reason under Creating the virtual machine failed.
On top of that, the Event Log ID 16000 doesn’t tell you much other than “The locale specific resource for the desired message is not present”, which is also a generic message with no real reason.
In my case, I retraced some steps and noticed this issue occurred after joining the Hyper-V server to the domain. All virtual machines added before then worked fine, but could not add, import, mount any existing VHD disks.
It appears to be a GPO related problem. In my case, I setup an OU with no inheritance to fix the issue. The server once joined to the domain was dropped into the default “Computers” container.
More info can be found from Microsoft here with alternate fixes: