An Azure service that provides serverless Kubernetes, an integrated continuous integration and continuous delivery experience, and enterprise-grade security and governance.
Have you registered your Azure Stack HCI cluster? https://learn.microsoft.com/en-us/azure-stack/hci/deploy/register-with-azure.
Windows Admin Center should be this version: https://techcommunity.microsoft.com/t5/windows-admin-center-blog/windows-admin-center-version-2103-2-is-now-generally-available/ba-p/2384136
Could you confirm that you can deploy a regular VM on your nested config?