after spending days and a lot of try and error, in our Environment (VMware) the following method was finally successful
Our VMs are all equiped with VMware Paravirtual Controller and vmnext3 Network Controller.
- When using VMware Tools 12.0.5 or later, you need to downgrade the Paravirtual Controller Driver below 1.3.25.0 (as suggested in Vmware KB https://kb.vmware.com/s/article/89290)
- usual downgrade/installing older driver vom cd/iso via device manager is enough, no need to delete/remove drivers via command line - reboot the machine
- upload Server 2022 August 2021 iso to vmware content library (current iso 2108.13 is running into a blue screen)
- login with local administrator !! not domain administrator
- mount Server2022 Iso to VM and run the upgrade
- don't use the download updates, driver and optional feature function !! use "not right now"
- lean back and cross your fingers ;)