Last week I was configuring a lab server with Hyper-V RC0 when I came across this error after creating a Virtual Switch with VLAN ID enabled:

Switch set up failed, name='3742d220-e73d-4ae5-bf0c-429ca168dc41', external port='d02dcb9e-76d4-496a-9c17-ea808e5ce125', internal port='375e5f91-b1fb-415d-8717-cd3ea36c9753', NIC='{165929BF-5BA2-4887-BC54-1D52C1A6BE61}', internal name='07b53c30-5d56-4a2d-a542-146773d39299', internal friendly name='Virtual Network Connection (VLAN Trunk)', error=2147749896, mof code=0.

Located in the Hyper-V application log this error resulted in a failed switch configuration and without a supported way to remove Virtual Switches (doesn’t seem right does it?) prevents you from creating any other network using that interface.

Turns out that this error occurs if you are creating a new network (with VLAN ID enabled) on a physical interface that doesn’t have a default VLAN ID specified, see example image below.

Hyper-V Networking
Hyper-V provides many networking improvements and the Virtual PC Guy’s has put together a great blog post explaining the changes, worth while reading for those making the move from Virtual Server.
Understanding Networking with Hyper-V