Hi Gaurav Wagh,
The error looks like virtualization is not enabled at the host level or your VM size does not support nested virtualization and ensure to select an Azure VM that supports nested virtualization.
According to Microsoft’s official documentation, the Basv2 series (which includes B4as v2) does not support nested virtualization. https://learn.microsoft.com/en-us/azure/virtual-machines/sizes/general-purpose/basv2-series?tabs=sizebasic
When trying to use WSL2, as it requires virtualization features that may not be enabled by default on Azure VMs.
Please check here for more information on Nested Virtualization.
Ensure the security type is Standard.
Please try with the command, wsl --set-default-version 1
If the issue still persists, uncheck Windows Subsystem for Linux and Virtual Machine Platform, restarting the pc and enable them again and try to install WSL 2.
Please check the workarounds followed here for more detailed information.
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