Hyper-V VM creation fails (HCS/ERROR_FILE_NOT_FOUND) even after full repair install, BIOS/chipset update

Adekunle Ayodeji 0 Reputation points
2026-09-17T09:01:31.5+00:00

System: HP ProBook 455 15.6" G10, AMD Ryzen 5 7530U, Windows 11 25H2

Issue: Cannot create any Hyper-V/WSL2 virtual machine. Every attempt (Docker Desktop, wsl --install with default WSL2 version) fails with:

Wsl/Service/RegisterDistro/CreateVm/HCS/ERROR_FILE_NOT_FOUND

Also seen at different points: HCS/0xC0370103, HCS/0x800706b5

Troubleshooting already completed:

  • Full Windows 11 in-place repair install (kept files/apps)
  • Updated BIOS/system firmware to latest version
  • Updated AMD chipset/PSP driver to latest version
  • Confirmed hardware virtualization enabled (Task Manager: "Virtualization: Enabled")
  • Confirmed Hyper-V, Virtual Machine Platform, WSL features all enabled and enable cleanly (DISM completes successfully, no hangs)
  • Windows Update history clean — no failed/looping updates
  • Disabled Memory Integrity/Core Isolation entirely (no change)
  • No third-party antivirus (Windows Defender only)
  • Core Hyper-V services (vmcompute, vmms, hns) all running normally, correct start types
  • Plain WSL1 (--set-default-version 1) works completely fine — confirms issue is isolated specifically to Hyper-V VM creation, not general virtualization/WSL support

Original cause suspected: a docker-desktop-data vhdx file went missing/corrupted, which then cascaded into this deeper VM-creation failure even after removing and attempting to recreate all WSL/Docker components.

What specific Hyper-V component or log should I check next to identify why VM creation itself (not just feature-enabling) is failing?

Windows for business | Windows Client for IT Pros | Storage high availability | Virtualization and Hyper-V
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  1. Xuan Nhu 970 Reputation points Independent Advisor
    2026-09-17T09:34:15.69+00:00

    Hello Adekunle,

    Since the failure also occurs when creating a basic Hyper-V VM, I agree that this is now a Hyper-V/HCS VM-creation issue rather than a Docker or WSL-specific problem. ERROR_FILE_NOT_FOUND (0x80070002) indicates that HCS cannot locate a file or resource required during VM creation, but the error alone does not identify which component is missing.

    The most useful next step is to reproduce the failure and immediately check the HCS logs:

    Get-WinEvent -LogName "Microsoft-Windows-Hyper-V-Compute-Admin" -MaxEvents 50 Get-WinEvent -LogName "Microsoft-Windows-Hyper-V-Compute-Operational" -MaxEvents 50

    Microsoft specifically documents these logs for Host Compute Service troubleshooting. If necessary, you can also temporarily enable the Microsoft-Windows-Hyper-V-Compute-Analytic log, reproduce the failure, and export it for deeper analysis.

    Because you have already completed an in-place repair, DISM/SFC, BIOS/chipset updates, and Hyper-V feature reinstallation, I would not recommend manually copying files or registry keys from another PC yet. Microsoft’s Hyper-V troubleshooting guidance also recommends checking the Hyper-V event logs, VM storage paths/permissions, third-party security/filter drivers, and related storage errors before making registry changes.

    Please share the Hyper-V-Compute Admin/Operational events generated by one failed VM creation, especially the event immediately before 0x80070002 or 0x80070003. That should tell us which file, path, device, or HCS resource is actually missing.

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  2. AI answer

    2026-09-17T09:02:02.76+00:00

    Use the Hyper-V creation troubleshooting data path first, because the issue is already narrowed to VM creation rather than feature installation.

    1. Check Windows Event Viewer for Hyper-V and storage errors.
      • Review system and storage event logs in eventvwr.msc.
      • Filter for recent errors that line up with the failed WSL2/Docker VM creation attempts.
      • The documented data collection path specifically calls out system and storage logs for Hyper-V creation/start failures.
    2. Check VM-related logs and error details from the Hyper-V troubleshooting checklist.
      • Query Windows event logs and VM logs for the exact failure point.
      • This is the next supported step when services are running and features enable correctly, but VM creation still fails.
    3. Verify file system permissions and ownership on Hyper-V VM configuration locations.
      • Hyper-V VM creation/import failures commonly trace to file system permissions or ownership problems.
      • Compare and correct NTFS permissions on the VM directory.
      • Ensure SYSTEM, Administrators, and Hyper-V groups have full control.
      • Set ownership to Administrators or SYSTEM, enable inheritance, and propagate permissions.
      • Retry VM creation after correcting permissions.
    4. Check for registry permission problems if the failure involves virtual networking or worker process creation.
      • A documented Hyper-V failure mode is registry permission issues under: HKLM\SOFTWARE\Microsoft\Windows NT\CurrentVersion\Virtualization\Worker
      • Warning: registry changes are high risk. Back up the registry before modifying it.
      • Compare that key with a working host if available, and verify vmwp.exe or SYSTEM has Full Control where required.
    5. Check Hyper-V virtual networking state.
      • Recheck the virtual switch in Hyper-V Manager.
      • Update or re-create the virtual switch if needed.
      • Use: 
             Get-VMNetworkAdapter -VMName <VMName>
        to review adapter status for any VM object that is partially created.
    6. Check for checkpoint or orphaned disk-chain issues if the original trigger was a missing VHDX.
      • Review VM storage for orphaned or missing .avhdx files.
      • Merge or delete unused checkpoints through Hyper-V Manager.
      • Avoid manual file moves or renames.
    7. Run OS integrity repair commands even after the repair install, because Hyper-V operational failures can still come from servicing or driver corruption.
      • Run: 
             sfc /scannow
     DISM /Online /Cleanup-Image /RestoreHealth
      • If the issue is tied to Hyper-V feature state or servicing corruption, these are the supported checks in the operational failure guidance.
    8. If the logs point to storage or low-level I/O, collect the documented diagnostics next.
      • mpclaim -s -d
      • mpclaim -v
      • diskpart then list disk, list volume, san
      • Perfmon or Storport traces with logman
      • TSS or WPR logs for IO, storage, failover, or VSS issues

    Given the symptoms, the most relevant next checks are:

    • Event Viewer system/storage logs
    • Hyper-V/VM logs for the failed creation attempt
    • NTFS permissions/ownership on Hyper-V VM folders
    • Virtualization\Worker registry permissions
    • Virtual switch/network adapter state
    • Orphaned VHDX/AVHDX artifacts from the earlier Docker/WSL failure

    The most likely documented buckets for this scenario are file system/permission issues, registry permission issues, virtual switch/network misconfiguration, or storage-related errors during VM creation.

    References:

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