Hello Fath,
You normally do not need to recreate the VM. First check the current Azure Disk Encryption (ADE) state before removing or rerunning the extension:
Get-AzVMDiskEncryptionStatus ` -ResourceGroupName "MyResourceGroup" ` -VMName "MyVM"
If the previous encryption attempt left the VM in a failed or inconsistent state, Microsoft recommends using the ADE management commands rather than manually changing BitLocker inside the guest. If decryption is required, disable ADE and allow BitLocker decryption to fully complete before attempting encryption again.
Disable-AzVMDiskEncryption ` -ResourceGroupName "MyResourceGroup" ` -VMName "MyVM" ` -VolumeType "All"
After confirming decryption has completed, you can remove the ADE extension if necessary and then enable encryption again using Set-AzVMDiskEncryptionExtension with the same Key Vault/encryption configuration. Microsoft specifically warns against simply deleting the extension while disks remain encrypted, because removing the extension and disabling encryption are separate operations.
Also check the extension failure message and ADE logs before retrying, because Key Vault permissions, network access, or an unsupported encryption configuration can cause the retry to fail again.
One additional consideration for new deployments: Azure Disk Encryption is scheduled for retirement on September 15, 2028, and Microsoft recommends encryption at host for new VMs and migration of existing ADE workloads before that date.