Hello Gopi Ram Bishnoi
Welcome to Microsoft Q&A Platform, thanks for posting your query here.
This error message indicates that there was an internal error while provisioning the VM. There could be several reasons for this error.
One possible reason is that the OS image failed to load due to incorrect preparatory steps or because of selecting the wrong settings during the image capture from the portal. Instead of creating VMs from generalized OS images, consider using managed images.
Another possible reason is that the cluster or region either does not have resources available or cannot support the requested VM size. Check the Azure Service Health dashboard or the Azure status page to see if there are any ongoing incidents that could be affecting VM provisioning.
Sometimes, the error may occur due to temporary issues or transient network problems. In such cases, retrying the provisioning process might resolve the problem.
Since you mentioned that the provisioning state is failing in VN creation, focus on this aspect. Verify that the virtual network and subnet are properly configured. One possible reason is that the subnet you are trying to create already exists in the virtual network. Another possible reason is that the virtual network address space is not valid or is overlapping with another virtual network.
Check the diagnostic logs for insights into the specific error that caused the provisioning failure.
If none of these troubleshooting steps helps, I would recommend you to open a azure support case. Support team will be able to check and help on this.
Hope this helps.