As you should know, through the latest version of Hyper-V coming with Windows Server 2016 & Windows 10 you can enable Nested Virtualization, which means you can install Hyper-V role on a Hyper-V virtual machine.
But in order to activate this functionality you need to meet some requirements, otherwise you will face this kind of error.
- Dynamic Memory must be disabled on the virtual machine containing the nested instance of Hyper-V
- VM must have more than 1 vCPU
- MAC address Spoofing must be enabled on the NIC attached to the virtual machine. This setting can be found in the advanced settings under the NIC in the virtual machine’s properties.
- Virtual Machine version must be 8.0
- Virtualization Extensions need to be exposed to the VM as seen below.
By default the virtualization extensions setting is disabled. To enable this setting, you have to use this command:
Set-VMProcessor -VMName "LAB01" -ExposeVirtualizationExtensions $true
Once all these settings have been applied, you can now install Hyper-V role and features on your virtual machine.