How to Fix Windows Cannot Find Microsoft Software License Terms

When I tried to install Windows 10 on a virtual machine so that I could upgrade that virtual machine to Windows 11, I was met by a useless error message, “Windows cannot find the Microsoft software license terms. Make sure the installation sources are valid and restart the installation. ”After fiddling around for a while, I was able to find a solution that worked.

It turns out that this error message actually means something very different from what it says: Something is wrong with this computer.

You usually get this message after installing on a virtual machine and configuring something in a strange way that is abnormal for a Windows 10 or 11 computer. To the example, here are some of the reasons for a problem:

  • You have enabled dynamic storage in Hyper-V

    This was the problem I was having and disabling automatic memory immediately solved the problem. See how to do this below.

  • Insufficient memory allocated to the virtual machine

    If you try to install on a virtual machine that doesn’t have a lot of RAM allocated, Windows might simply fail.

  • Your VMware virtual machine has a floppy disk drive

    Yes, Windows 10 doesn’t like floppy drives and may not be able to install in a virtual machine if you have one.

  • Secure Boot is not activated

    You want Secure Boot to be enabled. See below for the details.

  • Create an empty virtual machine and try again

    Sometimes the virtual machine software you are using has incorrect default settings, so you can manually create a virtual machine template with the correct settings, and then mount and install the ISO.

  • Something is wrong with your installation media

    Try downloading the ISO image again or using a different flash drive.

It is entirely possible that something else is causing this error, but these are the solutions we came across while researching.

How to turn off automatic storage in Hyper-V

Open Hyper-V Manager, find your virtual machine in the list and open Settings by right-clicking or using the actions pane on the right. Go to Storage, then uncheck the option for Enable Dynamic Storage.


Make sure you’ve allocated enough RAM to the VM for Windows to actually work properly.

Close the dialog box, restart your VM and it should work immediately.

How to enable Safe Boot in Hyper-V

Open Hyper-V Manager and open the settings for your virtual machine. In the left pane, look for Security, then check the option for Enable Safe Boot.

This option should be turned on by default, but sometimes manually creating a virtual machine template can result in it being turned off.

Enable Safe Boot for Hyper-V

You should be able to attach the ISO file and complete the installation at this point.

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