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FIX: Windows Cannot find Microsoft software license terms in Hyper-V or VMware.

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If you encountered the "Windows cannot find the Microsoft software license terms" error when trying to install Windows on a Hyper_V or VMware virtual machine, read the instructions in this tutorial to fix the problem.

FIX: Windows Cannot find Microsoft software license terms in Hyper-V & VMware

The error message "Windows cannot find Microsoft software license terms" usually appears when the Windows installation media is damaged or when the USB port to which the installation media is connected has problems.

In Hyper-V the error usually occurs when trying to install Windows with Dynamic Memory enabled, and in VMware when the "floppy drive" exists as a device in the VM configuration.

In this guide you will find detailed instructions on how to fix the Windows Setup error "Windows cannot find Microsoft software license terms" when trying to install Windows on Hyper-V or VMware hypervisor platforms.

How to FIX: "Windows Cannot find Microsoft software license terms" in Hyper-V.

Method 1. Disable Dynamic Memory in VM Settings.

1. Open the Virtual Machine settings and select Memory on the left pane.
2. Specify a standard amount of memory (e.g. 4096 MB), then uncheck the option "Enable Dynamic Memory" and click Apply > OK.
3. Now try, to install Windows again and if you receive the same error, proceed to method-2.

Disable Dynamic Memory in Hyper-V VM Settings

Method 2. Recreate VM but choose to Install OS later.

1.Delete the Virtual Machine you have created and also delete its files (virtual disk, etc.)

2. Create a new Virtual machine and do the following during the creation process:

a. In 'Assign memory' options, specify a standard amount of RAM and uncheck the "Use Dynamic Memory for this virtual machine" checkbox.

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b. In Installation options, select Install an operating system later and then click Next & Finish to create the virtual machine.

FIX: Windows Cannot find Microsoft software license terms in Hyper-V

3. After creating the virtual machine, open its settings and do the following:

a. Select SCSI Controller on the left and on the right choose the DVD Drive and click Add.

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b. Then select Image file, click Browse and select the Windows ISO file.

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c. When done, click Apply > OK and proceed to Windows installation.

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How to FIX: "Windows Cannot find Microsoft software license terms" in VMware.

Method 1. Remove the Floppy device.

1. Edit the Virtual Machine settings and remove the Floppy drive.
2. Now try, to install Windows again and if you receive the same error, proceed to method-2.

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Method 2. Recreate Virtual Machine but choose to Install OS later.

1. Delete the Virtual Machine you have created and also delete its files (virtual disk, etc.)

2. Create a new virtual machine and do the following during the creation process:

a. At the first step of the "New Virtual Machine Wizard" choose "I will install the operating system later" and continue to next steps to setup the machine.

FIX: Windows Cannot find Microsoft software license terms - VMware.

b. At the final step of the virtual machine wizard, select Customize Hardware.

FIX: Windows Cannot find Microsoft software license terms in VMware.

c. Then select the New CD/DVD on the left pane, and on the right pane, select "Use ISO image file", click Browse and select the Windows ISO file.

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d. When done, click Close and then Finish to create the virtual machine.

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3. Finally Start the virtual machine to install the operating system.

That's it! Which method worked for you?
Let me know if this guide has helped you by leaving your comment about your experience. Please like and share this guide to help others.

Frequently Asked Questions

What causes the 'Windows cannot find the Microsoft software license terms' error in virtual machines?

This error usually occurs when the Windows installation media is damaged or when there's an issue with the USB port to which the installation media is connected. Specifically, in Hyper-V, it can happen when Dynamic Memory is enabled, and in VMware, it can occur if a floppy drive is present in the VM configuration.
How can I fix the 'Windows cannot find the Microsoft software license terms' error in Hyper-V?

To fix this error in Hyper-V, you can try disabling Dynamic Memory. Open the Virtual Machine settings, select Memory, specify a standard amount (e.g., 4096 MB), uncheck 'Enable Dynamic Memory', and apply the changes. If the issue persists, recreate the VM and choose to install the OS later.
What steps should I take to resolve the software license terms error in VMware?

In VMware, start by removing the Floppy device from the Virtual Machine settings. If the error persists, delete the VM, recreate it, and choose 'I will install the operating system later' during setup. Once the VM is created, use the 'Customize Hardware' option to select the Windows ISO file for installation.
What should I do if these methods don't resolve the Windows installation error?

If you've tried disabling Dynamic Memory in Hyper-V, removing the Floppy drive in VMware, and recreating the VMs as suggested, and the error still occurs, it may be worth checking the installation media for damage or attempting the process with a new installation ISO to ensure the media itself isn't the issue.


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Konstantinos Tsoukalas
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Konstantinos Tsoukalas

Konstantinos is the founder and administrator of Wintips.org. Since 1995 he works and provides IT support as a computer and network expert to individuals and large companies. He is specialized in solving problems related to Windows or other Microsoft products (Windows Server, Office, Microsoft 365, etc.).

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1 Comment

  1. DanielG
    February 13, 2026 @ 4:08 pm

    Method 2. Recreate Virtual Machine but choose to Install OS later worked superb in VMware Workstation 25H2. Actually thought that Microsoft had 'done something' to prevent Windows Server 2019/2022 and 2025 from working with anything than HyperV. Wouldn't be surprised. There's a reason why the cloud giants earns so much money they don't know what to do with it. And IT department's stuck with the costs…IT has never ever been so expensive for companies.
    Anyhow, your solution worked perfect! Thanks a million!

    Reply

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