@jkatz
So everyone is cleared since I just experience the same issue not allowing me to create a new vm using the template.
Before you use the Windows 11 Template and you have it with SYSPREP ready. You need to go down to advanced and make sure you delete the VTPM
[image: 1769552292859-5d61aad5-013e-4cff-af7c-adbb4c4ca809-image.png]
then create the Template.
Once you create the vm again you will not receive the error and a vtpm will be created for the new VM with no issue.
Hope this helps.