HOWTO: Resolve “Cannot find the physical computer that runs the virtual machine.”
I recently ran into this problem when I had to set up Direct Access with a Hyper-V machine. See here for the cause and resolution (Thanks thompal)!
-go into the Registry and delete "HKLM\SOFTWARE\Policies\Microsoft\Windows NT\DNSClient\DnsPolicyConfig"
-in an elevated command prompt, enter: sc control dnscache paramchange
After that the “Virtual Machine Connection” was working fine.