i know i can't use WSL on windows 2016 but is there any way to upgrade 2016 to 2019 data center without creating a new VM ?
In place upgrades are not supported as of now.
Microsoft does not support an upgrade of the operating system of a Microsoft Azure virtual machine. Instead, you should create a new Azure virtual machine that is running the supported version of the operating system that is required and then migrate the workload.
You can post this as a product feedback here. This will allow the community to up-vote and for the product team to include into their plans.
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