Windows Server 2012 File Server Tip: Avoid loopback configurations for Hyper-V over SMB
When deploying Hyper-V over SMB (storing your live configuration and live VHD/VHDX files on an SMB 3.0 file share), make sure you don’t use a loopback configuration. A loopback configuration means that the Hyper-V role and the File Server role are on the same computer. While you can actually have both roles on the same machine, you should not use a UNC path pointing back to the same server. This is not a supported configuration.
The main reason for this restriction is the way permissions need to be configured for Hyper-V over SMB. You need to grant access on the file share to the computer account of the Hyper-V host. Well, when use a loopback configuration, this permission model does not work (the System account used by Hyper-V only gets translated to a computer computer when you’re accessing a remote file share). The end result will be an “Access Denied” error.
Loopback configurations also include deploying the Hyper-V role and the File Server role in the same Failover Cluster. While this can work when the VM is running in one node and the File Server is running on another node of the same cluster, it will fail if both roles happen to land on the same node at the same time. You could in theory make this work by configuring preferred nodes for each role, effectively making sure they never land on the same cluster node, but you really should configure two separate clusters, one for Hyper-V hosts and the other for File Servers.
If you really do need to have the Hyper-V role and the File Server role running on the same box, it’s really not a problem. Just use a local path using a driver letter (X:FolderFile.VHDX) instead of a UNC path (\serversharefolderFile.VHDX). The same goes for the cluster configuration: just use the local path to the cluster disk or cluster shared volume.