Earlier today I had the good fortune of deploying a known good Windows 7 image to a Hyper-V 3.0 (Windows Server 2012) virtual machine.
To my surprise the setup stopped with the infamous "Windows Setup could not configure Windows on this computer’s hardware" error. The image could be deployed to physical machines, but not to Hyper-V 3.0 machines (it's normally the oppsite around).
After troubleshooting for a while it came to me that I have been using the new VHDX format for my virtual disk in Hyper-V, which only really supports Windows 8 and Windows Server 2012 per the text when creating the VHDX file. The VHDX format is in fact a 4k drive, and Windows 7 RTM (which the image was) does not support it.
Workaround: Simply use a VHD file instead of VHDX and the problem went away… Another obvious solution is of course to recreate the image to a Windows 7 SP1 (plus the 982018 hotfix) image…
The infamous "Windows Setup could not configure Windows on this computer’s hardware" error when deploying a custom Windows 7 RTM image to a VHDX file.