You have a bunch of Gen1 VMs running Windows 10 using Legacy Bios. Your goal's to move upgrade them to Gen2 VMs and upgrade them to windows 11. How do you do that? It's simple

1. Mount each VHD to the host OS
2. Free some unallocated space on the drive
3. Convert the drive to GPT. This creates the EFI partition

With UEFI you can either create a FAT32 partition with EFI files or explicitly create an EFI partition (aka ESP - EFI System Partition) to store the EFI Files. The UEFI firmware is smart enough to see both methods of setting up the EFI partition and will boot from both. Explicitly creating an ESP is better since it conforms to the EFI specifications. More importantly, Windows 11 wont upgrade unless you have an ESP partition. Creating a normal FAT32 partition for EFI will work but the upgrade assistant will fail saying it "Sorry, We’re Having Trouble Determining If Your PC can Run Windows 11"

ESP Partitions have a specific UUID

1. Turn off Virtual Machine
2. Open diskmgmt.msc
3. Click on Action>Attach VHD from the toolbar and mount the VHDX file
4. Right-click the drive and click "online"

1. Open command prompt as administrator
2. Run diskpart.exe and free up space on the drive with Windows

DISKPART> list disk 
  Disk ###  Status         Size     Free     Dyn  Gpt
  --------  -------------  -------  -------  ---  ---
  Disk 0    Online          238 GB  1024 KB        *
  Disk 1    Online          465 GB  1024 KB        *
  Disk 2    Online         7452 GB  1024 KB        *
  Disk 3    Online 127 GB  1024 KB (THIS IS THE VHDX)

DISKPART> select disk 3
DISKPART> list partition
Partition ###  Type              Size     Offset
-------------  ----------------  -------  -------
Partition 1    Primary             50 MB  1024 KB
Partition 2    Primary            125 GB    51 MB (THIS IS THE WINDOWS DRIVE)
Partition 3    Recovery           508 MB   126 GB

DISKPART> select partition 2
DISKPART> shrink desired=100
DISKPART> exit

We'll use mbr-to-gpt which should come with Windows 10 by default. This will convert the disk to gpt without wiping the data from the computer. When the conversion happens, it'll also create a EFI partition out of the free space we created earlier

https://learn.microsoft.com/en-us/windows/deployment/mbr-to-gpt

# Validating that the conversion will work
c:\windows\system32\mbr2gpt.exe /allowFullOS /validate /disk:3

# Converting to GPT
c:\windows\system32\mbr2gpt.exe /allowFullOS /convert /disk:3

Now your VHDX is properly formatted for UEFI and Windows 11. Delete your Hyper-V VM and recreated it as Gen2. Make sure Secure Boot and TPM is enabled in the Hyper-V VM settings.

Take a minute to bask in your glory. Windows 11 will now be updating.