Chancy, thank you for posting this question here. Based on the error information shared in the question, it seems that your VM image is not supported for VMInsights (VM is on a custom image where we do not have visibility to the version of the guest operating system).
Please do review the Linux OS requirement available in the link below to understand the prerequisites:
Azure Monitor Agent (AMA) supported OS
In case the OS on this machine indeed falls in one of these criteria, please do let us know to investigate it further.