WSL2 / Docker “CreateVm timed out” error on Windows

When installing the Edge agent on Windows, Docker Desktop may fail to start with a WSL virtual-machine error such as:

The operation timed out because a response was not received from the virtual machine or container.
Wsl/InstallDistro/Service/RegisterDistro/CreateVm/HCS_E_CONNECTION_TIMEOUT

What this means

WSL2 runs Linux inside a lightweight Hyper-V virtual machine, and Docker Desktop runs on top of WSL2. This error means Windows creates that VM but never gets a response from it, so it times out. Because it fails the same way for every Linux distribution, the problem isn't Docker, the distribution, or the Edge agent — it's that hardware virtualization isn't available to Windows on this machine.

This is a host-environment configuration issue and is resolved on the machine hosting the Edge. The fix depends on whether the host is a physical PC or itself a virtual machine.

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First, identify the machine

Open Task Manager → Performance → CPU and check the lower-right corner:

• Virtual machine: No → physical PC. Follow Option A.
• Virtual machine: Yes → this is a VM (VDI, cloud, or a Hyper-V/VMware/VirtualBox guest). Follow Option B.

Option A — Physical PC

Most likely cause: hardware virtualization is switched off in the BIOS.

1. Reboot and enter BIOS/UEFI (usually F2, F10, or Del at startup).
2. Enable Intel VT-x or AMD-V / SVM Mode (under Advanced, CPU Configuration, or Security). Save and exit.
3. Back in Windows, in an Admin PowerShell, enable the platform features:

dism.exe /online /enable-feature /featurename:VirtualMachinePlatform /all /norestart
dism.exe /online /enable-feature /featurename:Microsoft-Windows-Subsystem-Linux /all /norestart

4. Restart the PC — required for the features to take effect.
5. Install the distribution: wsl --install -d Ubuntu

Option B — Virtual machine

Most likely cause: nested virtualization isn't enabled — a VM can't run its own VM without it. On the host/hypervisor (not inside the guest), enable nested virtualization for this VM:

• Hyper-V — with the VM powered off, run on the host:

Set-VMProcessor -VMName "<VMName>" -ExposeVirtualizationExtensions $true

• VMware / ESXi — VM Settings → Processors → enable "Virtualize Intel VT-x/EPT or AMD-V/RVI".
• Oracle VirtualBox — see the dedicated section below.
• Cloud VM — confirm the instance size supports nested virtualization (many standard tiers don't; you may need to resize).

Then power on, run the two dism commands from Option A, restart, and run wsl --install -d Ubuntu.

Oracle VirtualBox

If Windows is running as a VirtualBox guest, enable nested virtualization on the VM:

1. Power the VM off completely (not just save-state).
2. In VirtualBox Manager: select the VM → Settings → System → Processor → tick "Enable Nested VT-x/AMD-V". Command-line equivalent:

VBoxManage modifyvm "<VMName>" --nested-hw-virt on

3. Give the VM 2+ CPUs and ample RAM — WSL2's VM needs headroom.
4. Boot Windows, run the two dism commands from Option A, restart, then wsl --install -d Ubuntu.

Two catches to expect:

• "Enable Nested VT-x/AMD-V" is greyed out — usually VirtualBox is older than 6.1 (update to 7.x), or Hyper-V / Core Isolation is enabled on the physical host and is holding the virtualization extensions. Free those up on the host first.
• Performance — WSL2 inside VirtualBox is virtualization several layers deep; it works but can be slow for a long-running agent.

Confirm it worked

After the restart and install, check that a distribution is registered at version 2:

wsl -l -v

You want Ubuntu listed with VERSION 2. Once it is, start Docker Desktop — the "WSL not installed" and CreateVm errors will be gone, and you can resume the Edge agent install.

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Recommended for production

For a reliable, long-running deployment we recommend running the Edge agent on a Linux host (Ubuntu or Debian) rather than Windows. Docker runs natively there — no WSL or Hyper-V layer — and it starts automatically on boot, avoiding this entire class of virtualization issue.