Hi Maxbar,
Please check if my understanding is correct, you would like to deploy a hyper V S2D cluster, storing Hyper V VMs in S2D virtual disks.
If my understanding is correct, the "Hyper V cluster" and "S2D" cluster should be one cluster. If you have four nodes in total, then add the four nodes into the cluster, add local disks to each node, and enable S2D, then, create cluster VMs and store them in the virtual disk in S2D.
In the S2D cluster storage pool, create virtual disks:
In the "Disks", we may see the virtual disks in storage pool, then make the disk to be CSV, so that we may store Hyper V VMs in the CSV:
Then create Hyper V VM and store in CSV volume:
Based on my understanding, S2D cluster uses local attached disks for cluster nodes to use. I don't think virtual disks created in S2D cluster supports for another cluster to use via ISCSI.
Best Regards,
Anne