Cannot create App Layering image for MCS in Azure, hangs during Windows Setup.

To deploy an MCS image to Azure, you decide to use the Azure connector in App Layering. This produces a virtual disk that is primed to run through Windows Setup. You attach it to a VM, power it on, and find that Windows Setup never completes. If you look at the console screen shot in the debugging page in Azure, you see an image like this:


That is a black screen that says Getting Ready, with a CMD (command prompt) window titled ERROR HANDLER, at the path C:Windowssystem32oobe. This means Windows Setup failed. You can download the VHD and open it up to read Windowssetupact.log, Windowspanthersetupact.log, WindowslogsCBScbs.log, but that won’t help too much.

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