You plan to use a Hyper-V virtual machine (VM1) as the source for a custom Cloud PC image for Windows 365. VM1 is Gen 2 with a 64 GB fixed-size VHDX disk. What is the first change you should make on VM1 so it can be used as the custom image source?

Windows 365 custom images require the virtual hard disk to be in VHD format, not VHDX. Although VHDX offers advanced features like larger disk sizes and resilience to corruption, Windows 365 provisioning processes specifically expect VHD files for custom images. Converting the virtual disk to dynamically expanding is not required; fixed-size VHDs are acceptable. Changing the VM generation to Generation 1 is unnecessary as Gen 2 VMs are supported. Increasing the virtual disk size is also not the first required change, as the current size might be sufficient, and the format is the primary concern.