Windows cannot find the Microsoft Software License Terms: how to fix it

Applies to: Windows 11, Windows 10 and Windows Server 2016 to 2025 setup, on PCs, Hyper-V and VMware.

Why Windows setup can’t find the license terms

The full message reads: Windows cannot find the Microsoft Software License Terms. Make sure the installation sources are valid and restart the installation. It shows up right after you choose an edition or enter a product key, just before the licence screen. Setup looks up the licence file that belongs to the selected edition inside the image, and the error means that lookup failed. In practice it comes down to one of these:

• Corrupt or incomplete media: a bad download, a USB drive written incorrectly, or a scratched DVD.
• Not enough memory in Windows PE: setup unpacks files into RAM. A virtual machine starting with 512 MB or 1 GB, especially with Hyper-V Dynamic Memory, can run out and fail with this message.
• An edition mismatch: the product key, the ei.cfg file or an answer file asks for an edition (for example Enterprise or Server Datacenter) that isn’t in the image you’re installing from.
• VMware Easy Install leftovers: VMware attaches a virtual floppy with its own answer file, which can conflict with the ISO.

Fix 1: Recreate the installation media

On a real PC, start here. Re-using an old USB stick or a copy of an ISO from an unknown source is the most common cause.

1. On a working PC, download Windows directly from Microsoft’s Download Windows 11 or Download Windows 10 page, using the Media Creation Tool or the ISO download. For Windows Server, re-download the ISO from the source you licensed it through.
2. Use a USB drive of at least 8 GB, and let the Media Creation Tool write it. It formats the drive and copies everything in the right way. If you use a third-party tool to write an ISO, keep its default settings.
3. If you downloaded an ISO, compare its SHA-256 hash with the one Microsoft lists on the download page, where provided. In PowerShell: Get-FileHash C:\path\to\file.iso.
4. Boot from the new media and start setup again.

If you’re reinstalling the same version on a working PC, our guide on how to reinstall Windows 10 covers the options that keep your files, which avoid boot media entirely.

Fix 2: Give the virtual machine more memory (Hyper-V)

This is the classic cause in Hyper-V. Shut the VM down, then in Hyper-V Manager right-click it, choose Settings > Memory and:

• Set Startup RAM to at least 2048 MB for Windows 10 or Windows Server, and 4096 MB for Windows 11 (its minimum requirement is 4 GB).
• Clear Enable Dynamic Memory while you install. You can turn it back on afterwards.

Start the VM again and run setup. Some admins have also fixed it by temporarily disconnecting the VM’s network adapter from an internet-connected virtual switch during setup, particularly with Server evaluation ISOs. That’s a reported workaround rather than a documented cause, but it’s harmless to try. If Hyper-V itself won’t start VMs, see Not in a hypervisor partition: how to fix it.

Fix 3: Remove the floppy drive in VMware

When you create a VM in VMware Workstation and point it at an ISO, Easy Install can add a virtual floppy containing an answer file built from the product key and edition you typed. If those don’t match the ISO, setup fails with this error. To fix it:

1. Shut down the VM and open VM > Settings.
2. Select the Floppy device and either remove it or clear Connect at power on.
3. Make sure the CD/DVD device points to the Windows ISO, then start the VM and install manually.

Next time, choose I will install the operating system later in the New Virtual Machine wizard, then attach the ISO yourself. That skips Easy Install completely. Once Windows is in, you’ll want VMware Tools; if that option is unavailable, see Install VMware Tools greyed out.

Fix 4: Use a product key that matches the edition

If the error appears right after you enter a product key, the key may belong to an edition the media doesn’t include. Typical examples are an Enterprise or volume licence key used with consumer media, or a Datacenter key used with a Standard-only image. Try these:

• Select I don’t have a product key on the key screen, choose the edition you’re licensed for and activate after installation. On consumer Windows 10 and 11 media that’s usually the simplest route, and a PC with a digital licence will often activate automatically.
• Use installation media for the right channel. Volume licence editions come from your organisation’s licensing portal (for example the Microsoft 365 admin center or Volume Licensing Service Center), not the public download page.
• Check which editions an image contains. With the media mounted as drive E:, run the command below (use install.esd instead of install.wim if that’s the file in the sources folder).

dism /Get-WimInfo /WimFile:E:\sources\install.wim

Fix 5: Check ei.cfg and unattended answer files

This applies if you or your IT department customised the media. Windows setup can read two optional files from the sources folder:

• ei.cfg sets the edition, the channel (OEM or Retail) and whether it’s volume licensed.
• PID.txt supplies a product key.

If they describe an edition that isn’t in the image, or a key and channel that don’t fit together, setup can fail with this error. Delete them from a copy of the media to let setup ask for the edition instead, or correct them to match. Microsoft documents the exact format on its EI.cfg and PID.txt page, linked below. The same applies to an autounattend.xml answer file: check that its image index or edition name matches what dism /Get-WimInfo lists. Images slimmed down with third-party tools are a frequent source of this mismatch, so test with an untouched Microsoft ISO before troubleshooting further.

Fix 6: Rule out RAM and USB port problems

If fresh media still fails on a physical PC:

• Plug the USB drive into a different port, preferably one directly on the motherboard rather than a hub or front-panel port.
• Test the memory. Faulty RAM corrupts files as setup unpacks them. On another working Windows installation on the same PC, run mdsched.exe (Windows Memory Diagnostic), or remove one RAM stick at a time.
• Load the firmware’s default settings (UEFI/BIOS) and make sure the USB drive is selected in the boot menu or listed first in the boot order.

Upgrading from inside Windows and getting a different setup error instead? See 0xC1900101 – 0x20017.

Related guides

• How to reinstall Windows 10 (with or without losing files)
• How to downgrade from Windows 11 to Windows 10
• Install VMware Tools greyed out: how to fix it
• Not in a hypervisor partition: how to fix it

Official sources: for more detail, see Microsoft’s own pages:

• Microsoft Support: Create installation media for Windows
• Microsoft Learn: Windows Setup Edition Configuration and Product ID Files (EI.cfg and PID.txt)

Frequently asked questions

Does this error mean my product key is invalid?

Not necessarily. A valid key for a different edition than the media contains triggers it too. Choose I don’t have a product key, install the edition you’re licensed for, and activate once Windows is running.

Why does it happen so often in Hyper-V?

Because the setup environment runs entirely in memory, and new Hyper-V VMs often start with very little RAM under Dynamic Memory. Raising the startup memory and turning off Dynamic Memory during installation fixes it in most cases.

Can I fix it without a new USB drive?

Yes. You can re-write the same drive with the Media Creation Tool, which erases it first. Only replace the drive if writing or booting from it keeps failing.

Does this happen with Windows Server evaluation ISOs?

Yes, it’s commonly reported with Server evaluation media in VMs. Use the memory and floppy fixes above, and don’t enter a retail or volume key during setup of an evaluation image; convert the edition after installation instead.