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Upgrade from Windows Server 2008 to Server 2012 R2 Fails on VMWare. There is no reason why. Then it rolls back to Windows Server 2008.

The anwser is to remove the RESERVED PARTITION. If you look at the device manager, there will be 2 partitions; 1 for the RESERVED PARTITION and 1 for WINDOWS.

1- set the main Windows parition as the boot:

Run command prompt as administrator
Type: bcdboot c:\windows /s c:
(You should get a message that states: Boot files successfully created.)
Open Disk Management, right-click on your C: drive and select Mark Partition as Active.
Reboot

2- remove the RESERVED PARTITION.
Edit the VM in WMWare to remove the RESERVED PARTITION HARD DRIVE. This will be the lowest partition size.
Reboot

That should do it!

If not, you might have to boot from a install ISO, go to REPAIR, ADVANCED, CMD and fiddle with DISKPART and BOOTREC.