The virtual machine is in a failed state

Adam Polnicki 0 Reputation points

OS Provisioning for VM 'Win10Desktop-02' did not finish in the allotted time. However, the VM guest agent was detected running. This suggests the guest OS has not been properly prepared to be used as a VM image (with CreateOption=FromImage). To resolve this issue, either use the VHD as is with CreateOption=Attach or prepare it properly for use as an image:

Deleting and recreating the virtual machine may resolve the issue.

Azure Virtual Machines
Azure Virtual Machines
An Azure service that is used to provision Windows and Linux virtual machines.
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