This issue occurs when a virtual machine with a licensed version of Windows Server 2008, Windows 2008 R2, Windows 2012, or Windows Vista is cloned using the Customization Wizard and an invalid Product ID is entered in the Windows License page, cloned virtual machines reboot repeatedly with errors.
This issue occurs because Virtual Machine Manager (VMM) can only validate the syntax of the product key. However, it cannot validate whether or not the key is valid for that OS. If you create a guest OS profile with a syntactically valid product key but invalid for the OS which is being deployed, you will get an error during customization.