If you're trying to install Windows Server 2016 on a virtual machine and encounter the error:
Don't panic. You're not alone — and more importantly, you're minutes away from a proven fix.
In this blog post, we’ll explain why this error happens and give you a step-by-step guide to fix it on VMware and VirtualBox.
What Causes This Error?
Even when using a genuine Windows ISO from Microsoft, this error can appear due to:
1. Easy Install (Unattended Mode) Fails
Both VMware Easy Install and VirtualBox’s unattended mode can incorrectly load the installation source or skip essential files like the license terms.
2. ISO File Is Damaged or Incomplete
Even if the ISO is from Microsoft, it may have downloaded incompletely or got corrupted during the copy process to the virtual media.
3. Incorrect VM Configuration
Some common misconfigurations include:
- Too little RAM
- Extra virtual floppy drive
- Wrong firmware type (UEFI/BIOS)
The Working Fix (VMware Workstation / Player)
Follow these steps:
Step 1: Create a VM Without Easy Install
- Open VMware
- Click Create a New Virtual Machine
- Choose "I will install the operating system later"
- Select OS: Windows Server 2016 or later (x64)
Step 2: Configure the VM Correctly
| Setting | Recommended Value |
|---|---|
| RAM | Minimum 2 GB (preferably 4 GB) |
| Firmware | BIOS (disable UEFI for simplicity) |
| Floppy Drive | Remove it — it can confuse the installer |
| CD/DVD | Attach your Windows Server 2016 ISO |
| Hard Disk | At least 60 GB (recommended for Server setups) |
Step 3: Start Installation
- Power on the VM
- The Windows Setup screen should now load properly
- You’ll be able to accept the license agreement and proceed with installation
Fix for VirtualBox Users
You can run the same ISO in VirtualBox, just avoid unattended mode.
VirtualBox Setup Guide:
- Create new VM → Choose Windows 2016 (64-bit)
- On "Unattended Installation" screen → click “Skip Unattended Installation”
- Set RAM to 4096 MB (minimum 2048 MB)
- Use BIOS (not UEFI) unless you specifically need GPT
- Mount the same Windows Server 2016 ISO
Boot the VM, and installation should now work smoothly without any license error.
Bonus: Verify the ISO File
Even official downloads can get corrupted. You can check the file integrity using PowerShell:
Get-FileHash "Path\to\Windows_Server_2016.iso" -Algorithm SHA256Then compare the hash with the one listed on Microsoft’s site (MSDN or Volume Licensing Center).
Summary: Fixing "Cannot Find License Terms" in Windows Setup
| Action | Why it Matters |
|---|---|
| Avoid Easy Install / Unattended Mode | Prevents skipped license file loading |
| Use Manual OS Setup | Ensures full control over install process |
| Remove Floppy Drive | Prevents incorrect file lookups |
| Verify ISO Integrity | Rule out file corruption |
| Allocate Sufficient RAM | Prevents memory paging errors during setup |
Final Thoughts
This issue has less to do with Windows Server itself and more to do with how your VM loads the installer. Once you bypass Easy Install and set things up manually, you’ll find the process smooth and stable.
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