VMware workstation will not be compatible in Azure VMs as this needs Virtualization to be enabled from the bios level.
https://learn.microsoft.com/en-us/virtualization/hyper-v-on-windows/user-guide/nested-virtualization
You can create VMs using Nested Virtualization in an Azure VM and below are the steps for the same.
Steps to enable HyperV in an Azure VM :
- Create a new VM in Azure:
Operating system: Windows Server 2016 Datacenter
Size: Any V3 series with at least two cores that support nested virtualization. For more information, see Introducing the new Dv3 and Ev3 VM sizes. - After the VM is created, remote desktop to the Rescue VM.
- In Server Manager, select Manage > Add Roles and Features.
- In the Installation Type section, select Role-based or feature-based installation.
- In the Select destination server section, make sure that the VM is selected.
- Select the Hyper-V role > Add All Features.
- Select Next on the Features section.
- Select the Virtual switch that is available.
- On the Migration section, select Next
- On the Default Stores section, select Next.
- Check the box to restart the server automatically if required.
- Select Install.
- Allow the server to install the Hyper-V role. This takes a few minutes and the server will reboot automatically.
Steps to create a new VM in Hyper V :
- Open Hyper-V Manager: In Server Manager, select the Hyper-V role. Right-click the server, and then select the Hyper-V Manager.
- In the Hyper-V Manager, right-click the VM name, and then select New > Virtual Machine > Next.
- Type a name for the VM, and then select Next.
- Set the startup memory at 1024 MB or more.
- Select the Hyper-V Network Switch that was created.
- Under hard disk section, select “Create a Virtual hard disk”
- Under the installation options, select “Install OS from bootable CD/DVD-ROM and browse the .iso image file of the operating system that you would want to deploy
Hope this helps.
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