question

@LuckyPhantom-7602,
I tried to replicate your case, created a B1s instance with 4 GB ram, and I am able to encrypt my OS and data SDD LRS disks. Are you getting any errors while encrypting your disks?

@RaviKanth-5629,
Thank you for investigation. Does it mean that it's not necessary to have at least 8 GB of RAM like described in the article? We also have one production Linux machine with even 2 GB of RAM (B1ms). Can we just encrypt it without changing the instance type as well?

@LuckyPhantom-7602 Adding more information to the above response! Yes you can encrypt(once the vm is encrypted we can resize to lower size RAM)

 Minimum memory:
- 2GB for Linux VMs when only encrypting data volumes
- 8GB for Linux VMs when encrypting both data and OS volumes, and where the root (/) file system usage is 4GB or less
- **The root file system usage 2 for Linux VMs when encrypting both data and OS volumes, and where the root (/) file system usage is greater than 4GB*
 XFS: Encryption of XFS data disks is supported only when the EncryptFormatAll parameter is used. This will reformat the volume, erasing any data previously there. For more information, see the EncryptFormatAll criteria.
 Operating systems: ADE is supported on a subset of the Azure-endorsed Linux distributions, which is itself a subset of all Linux server possible distributions.

For more information refer to the below mentioned articles:
https://docs.microsoft.com/en-us/azure/virtual-machines/linux/disk-encryption-overview
https://docs.microsoft.com/en-us/azure/virtual-machines/linux/disk-encryption-faq

Please let us know if you have any further queries. I’m happy to assist you further.

Please do not forget to and “up-vote” wherever the information provided helps you, this can be beneficial to other community members.

@LuckyPhantom-7602 Apologies for the delay response! Can you please serial console logs

Also screenshot of the error message?

This error can be caused by either folders being too large for the VM ram to handle or by files being locked because they are in use. This server was already in use and running software when you try to encrypt it

Provided guidelines on how to encrypt the VM's successfully:
As described in the article https://docs.microsoft.com/en-us/azure/virtual-machines/linux/disk-encryption-linux, the VM’s which are going to be encrypted need to be considered as unavailable.

For successful disk encryption, the following steps should be followed:

1. Make sure that the VM has enough RAM(minimum 7Gb) and also enough space in the OSDisk.

2. Make sure that the application is stopped prior to the encryption process is started, also make sure that the application remains stopped after a reboot also, as the ADE process will reboot the vm.

3. Make sure that the vm is not accessed by any means being it ssh or winscp or any other tools.

4. Make sure that there is no extension installed in the vm.

5. Make sure that there is no server hardening is done on the vm which is going to encrypted.

      You can also encrypt using PowerShell: 
        New-AzResourceGroup -Name " ADE-CentOS" -Location "EastUS"
            
        Create a virtual machine: Skip as you already create the VM
        $cred = Get-Credential
        New-AzVM -Name CentOS -Credential $cred -ResourceGroupName ADE-CentOS -Image OpenLogic:CentOS:7_9:7.9.2021020400 -Size Standard_D4S_V3
            
        Create a Key Vault configured for encryption keys: Skip if you already create the Keyvault
        New-AzKeyvault -name ade-keyvault-jstrom -ResourceGroupName ADE-CentOS -Location EastUS -EnabledForDiskEncryption
            
        Encrypt the virtual machine:
            
        $KeyVault = Get-AzKeyVault -VaultName ade-keyvault-jstrom -ResourceGroupName ADE-CentOS
            
        Set-AzVMDiskEncryptionExtension -ResourceGroupName MyResourceGroup -VMName CentOS -DiskEncryptionKeyVaultUrl $KeyVault.VaultUri -DiskEncryptionKeyVaultId $KeyVault.ResourceId -SkipVmBackup -VolumeType OS
            
        To review the encryption status run:
            
        Get-AzVmDiskEncryptionStatus
   

   
   

Azure Disk Encryption for Linux VMs troubleshooting guide: https://docs.microsoft.com/en-us/azure/virtual-machines/linux/disk-encryption-troubleshooting