To use MDT Lite Touch for Windows 11 upgrades you need to add the /eula accept parameter to setup. That's easily done by using the WindowsUpgradeAdditionalOptions task sequence variable in MDT. Continue to read for more details…
If you try to use MDT Lite Touch to upgrade a Windows 10 machine to Windows 11 you quickly learn that LTIApply.wsf fails with error code 1. Showing something like the below screenshot:
The reason for the failure is (again) that setup.exe needs to have the /eula accept parameter set. If you open the Setuperr.log you find that setup failed with error code 0xC190010E which is indeed the error code for not accepting the license agreement.
Note: Don't mistake the 0xC190010E error with the very common 0xC1900200 error, which means that your machine does not meet the technical requirements of Windows 11. If you are testing this on VMs, which don't have TPM 2.0, even when a virtual TPM is enabled. And/or may not have the correct CPU depending on your host CPU. You can have the Windows 11 setup skip checking that by create the AllowUpgradesWithUnsupportedTPMOrCPU key in HKLM\SYSTEM\Setup\MoSetup, and create a REG_DWORD value of 1. Not recommended for production use obviously but should be fine for lab and test. Here is a link to the official docs on the topic: Ways to install Windows 11.
To add support for Windows 11 upgrades, edit your Windows 11 upgrade task sequence and add the WindowsUpgradeAdditionalOptions variable with the /eula accept at some point prior to the Upgrade Windows action. In my task sequence I added it directly after the Gather local only action. Like this: