WSL 2 error 0x80041002 - No distro being installed

Question

I have been not using WSL for weeks now, and I don't remember exactly what I did last. But I see that now when I try to open wsl, I get this error:-

Installing, this may take a few minutes...

WslRegisterDistribution failed with error: 0x80041002

Error: 0x80041002 (null)

Press any key to continue... 

I have tried using Ubuntu, Debian, none worked. Here is what I tried in summary:-

After it launches, it returns the above error. I have enabled the following windows features:

I have even checked that virtualization is enabled in my bios. I disabled the extra network adapters (vmware) but still doesn't work. Can you please help me with this?