Based on current findings, this issue is not caused by customer configuration. It is related to Azure Local (Azure Stack HCI) v24H2 VM attestation, which is required for automatic Windows Server guest activation.
Recommended actions for now:
Validate cluster and attestation health (for confirmation only):
On the Azure Local host, please verify:
- Cluster is Registered and Connected
- HCI Attestation status is Active
- These checks help confirm the environment is healthy, but they will not resolve the activation issue.
Temporary workaround (if activation is urgently required):
- Activate Windows Server VMs using KMS or a valid MAK key as a short‑term workaround.
- Automatic activation via Azure Local will resume once the underlying attestation issue is resolved.
Deploy a virtual Azure Local system - https://learn.microsoft.com/en-us/azure/azure-local/deploy/deployment-virtual?view=azloc-2602