Hello Rhonda, thank you for posting in the Microsoft Q&A community.
This issue commonly occurs when there is a temporary network synchronization failure with Microsoft's authentication servers, or if a background two-factor authentication prompt fails to load correctly within the setup interface.
To resolve this, the workaround is to bypass the mandatory network requirement. This will allow you to create a Local Administrator account, log into Windows, and complete the setup without needing to authenticate your Microsoft account immediately.
Please follow these steps:
- On the setup screen where you are stuck, press Shift + F10 (or Shift + Fn + F10 on some laptops) to open the Command Prompt.
- Click inside the Command Prompt window, type the following command, and press Enter:
oobe\bypassnro
- The computer will immediately restart and return to the beginning of the setup process.
- Proceed through the screens again. When you reach the network connection screen, click I don't have internet at the bottom.
- Select Continue with limited setup.
- You will be prompted to enter a username and password to create a Local Administrator account.
Once you reach the Desktop, you can verify if you have Windows 11 Home or Pro by navigating to Settings > System > About. After confirming, you can connect to the internet and go to Settings > Accounts > Your info to properly link your Microsoft account.
If the command above does not work or the Command Prompt fails to open, could you please let me know if the device is currently hardwired via Ethernet or using Wi-Fi? Additionally, do you see any Sign-in options link on the error page?
I will follow up on this thread to ensure your VMs are upgraded successfully. If the guidance provided helped you navigate to this solution, please consider clicking 'Accept answer'. This officially marks the thread as answered and greatly helps other community members who are searching for a solution to this exact same problem.
Official Microsoft Documentation & Best Practices: *Troubleshoot problems signing in to Windows *Customize the Out of Box Experience (OOBE)