Hi @Rich Roy
Thanks for reaching out to Microsoft Q&A Platform .
Let me break my response in three parts here :
When does a VM go into a "Failed" state ?
When ever there is an update operation on the VM which eventually failed with X reason { In your case capacity } , The VM Might land into this inconstant state .
How an i recover VM provisioning state from Failed to Succussed ?
We will need to review the failure and troubleshoot/act on it accordingly
How can we Monitor all the failed operations on VM's and get notifications ?
Step 1 : Navigate to Alerts section of the VM and select Activity log-Administrative for CRUD :
Step 2 : Set Up alerting for only failed events :
This should alert you with when ever any update on the VM fails.
Hope this solution helps in your case , If so kindly accept the answer so that it can be useful for the community .
Thanks & Regards,
Pradeep