Recently, I've seen some problems related with BITS (Background Intelligent Transfer Service) during VM creation from SCVMM.
One error I've seen is that the process appears to hang but was indeed extremely slow (1MB in 1 hour), the other was an error message in SCVMM like:
Error (12700) <path to vhd on destination host> 'The file or directory is corrupted and unreadable' (0x80070570)
During VM creation VMM uses BITS to initiate a file transfer from the VMM Library Server to the destination host. The Library Server could be the VMM Server itself (default) or any other server you added as a Library Server. By default the Library Server is using TCP port 443 to handle the transfer, and a SCVMM Certificate is used to encrypt the transfer
In the errors I've seen, there was also a Web Server running on the Library Server and configured to handle HTTPS. It is also listening on port 443 and another Certificate is used. So we have a potential conflict.
To solve this problem you could either move or re-configure the Web Server (e.g. listening on other IP) or change the BITS port SCVMM is using during transfers:
1. On your VMM Server open the Registry
2. Browse to HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Microsoft System Center Virtual Machine Manager Server\Settings
3. Locate BITSTcpPort which should have a value of decimal 443. Change this to some port unused in your environment. (e.g. 8500)
3. Restart Virtual Machine Manager Service so that the change takes effect.