When deploying or cloning virtual machines from a Windows 2008 R2, Windows 2012, or Windows 7 template configured with the VMXNET3 virtual network device:

• The resulting virtual machine's guest operating system shows the Ethernet network interface as:
   
  • VMXNET Device #2 in Device Manager
  • Local Area connection #2 in Network Properties
     
• The old Ethernet network interface remains present in Device Manager when Show Hidden Devices is enabled.
• The old Ethernet network interface retains its network configuration, preventing the new interfaces from reusing the previous static IP addresses. For more information see Networking Error: IP address already assigned to another adapter (1179).

Note: Upgrading the virtual hardware from version 4 to 7, or upgrading the VMware Tools, may automatically convert Flexible or VMXNET2 virtual network interfaces to VMXNET3. This issue may be observed after such an upgrade.

During template deployment or cloning, new virtual hardware is created for the destination virtual machine. Network interfaces are assigned new MAC addresses. PCI Express devices, including the VMXNET3 virtual ethernet adapter, a new serial number is generated as well.

Windows 2008 R2, Windows 2012, and Windows 7 track PCI devices by which slot the device is connected to. Moving a PCI network interface between slots will allocate a new set of settings for the NIC as it is considered a new device. Replacing a PCI network interface with the same make and model will retain use of the previous settings. However, PCI Express devices are tracked by their serial number, which is derived from the MAC address.

When a virtual machine is created by cloning or template deployment, the new virtual machine's PCI Express virtual network interfaces have different MAC addresses and serial numbers, and are detected as new devices.

The same behavior can be observed by deploying clones of Windows 2008 R2, Windows 2012, or Windows 7 on new physical hardware with PCI Express network interfaces in the same slots.

Solution:

• For Windows 7, go to Control Panel -> System and Security -> Windows Update -> Check for Updates.
• For Windows 10, go to Settings -> Updated & Security.  Ensure "You're up to date" is seen.  There is no need to click the "Check for updates" button.

Workaround 1:

Before converting a virtual machine to a template, remove references to the PCI Express virtual network interfaces in the source virtual machine:

1. Edit the virtual machine configuration to remove the virtual network interface.
2. Power the virtual machine on.
3. Use Device Manager to remove network interface devices named similar to "VMXNET Device". 
4. Shut down the guest operating system.
5. Edit the virtual machine configuration to add a new virtual network interface.
6. Convert the virtual machine to a template.

When the new virtual machine is created by deploying this template, the network interface will have a new serial number and MAC address. Windows will detect this network interface as a new device, but there will be no previous network device retaining old settings.

Workaround 2:

After deploying a virtual machine from a template or performing a clone, remove references to the previous PCI Express virtual network interfaces in the destination virtual machine. Use Device Manager to remove network interface devices named similar to "VMXNET Device".

Workaround 3:

Reconfigure the affected virtual machines to use the E1000 or other PCI network interface. For more information, see Choosing a network adapter for your virtual machine (1001805) and Manually configuring a virtual machine to use the e1000 network adapter driver (1003020).

Workaround 4:

When looking at the hidden devices within the Microsoft Guest operating systems, make sure you remove the Microsoft ISATAP adapter prior to configuring the new vNIC with a Static IP address inside a virtual machine.