I believe the issue is due to Service Fabric being Bronze tier. You can see the requirements for Service Fabric here.
- Service Fabric durability level is Silver or Gold. If Service Fabric durability is Bronze, only Stateless-only node types support automatic OS image upgrades).
- The Service Fabric extension on the scale set model definition must have TypeHandlerVersion 1.1 or above.
- Durability level should be the same at the Service Fabric cluster and Service Fabric extension on the scale set model definition.
- An additional health probe or use of application health extension is not required for Silver or Gold durability. Bronze durability with Stateless-only node types requires an additional health probe.
- The property virtualMachineProfile.osProfile.windowsConfiguration.enableAutomaticUpdates property must set to false in the scale set model definition. The enableAutomaticUpdates property enables in-VM patching using "Windows Update" and is not supported on Service Fabric scale sets.
Ensure that durability settings are not mismatched on the Service Fabric cluster and Service Fabric extension, as a mismatch will result in upgrade errors. Durability levels can be modified per the guidelines outlined on this page.
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