‘OS Provisioning for VM ‘vmName’ did not finish in the allotted time. However, the VM guest agent was detected running. This suggests the guest OS has not been properly prepared to be used as a VM image 

Solution

You will need to Sysprep your image before capturing 

sysprep.exe /oobe /generalize /mode:vm /shutdown

• Don’t capture a VM that already exists in your host pools. The image will conflict with the existing VM’s configuration, and the new VM won’t work.
• Make sure to remove the VM from the domain before running sysprep.
• Delete the base VM once you’ve captured the image from it.
• After you’ve captured your image, don’t use the same VM you captured again. Instead, create a new base VM from the last snapshot you created. You’ll need to periodically update and patch this new VM on a regular basis.
• Don’t create a new base VM from an existing custom image.