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I have a VM that is running in Azure, and joined to our domain (also in Azure). I need to restore a copy of this VM to a new machine, however because the computer is joined to domain I have issues with Kerberos and duplicate SIDs. Sysprep OOBE cannot be performed on an Azure VM because it removes the Azure VM agent extension, rendering the VM innaccessible. Solutions?

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You need to run Sysprep on the VM to resolve the SID issues etc. Once you run Sysprep the VM will be shut down, do not start it up again. At this point you need to create a managed image of the VM, which you can then use to create a new VM, which will get setup correctly with the VM Agent extension etc.

The steps to Sysprep and create a managed image can be found here.

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