For ESXi hosts that are in a Failed state post upgrade:
Place the ESXi host in vSphere maintenance mode.
SSH to the ESXi host.
Confirm the advanced setting is not applied:
net-dvs -l | grep com.vmware.nsx.vdsSecurity.enabled
<no output returned>
Set the property on all vDS used by NSX:
net-dvs -s com.vmware.nsx.vdsSecurity.enabled -p hostPropList <vDS name>
Reboot the ESXi host for the change to take effect, either from the vSphere client or from command-line:
reboot
Exit the host from maintenance mode.
SSH to each ESXi host.
Set the property on all vDS used by NSX:
net-dvs -s com.vmware.nsx.vdsSecurity.enabled -p hostPropList <vDS name>
Proceed with NSX upgrade as normal.
Alternative Preventative fix prior to upgrading
Use in-place host upgrade mode instead of maintenance mode upgrade.
Hosts will show a Failed state after upgrade and vmotion will be blocked, there will be no impact on running VMs.
The hosts will change back to a Success state once the NSX Manager upgrade completes.
Please see more details on in-place host upgrade in the Upgrade Guide:
3.2.2: Operational Impact of the NSX-T Data Center Upgrade
4.0.1.1: Operational Impact of the NSX-T Data Center Upgrade