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The vhdutil utility is completely dead; the whole subsystem it relies on was removed with [1] so it's not even vaguely possible to keep it up-to-date. I took the .raw images on a nb and used the qemu-img there (so Xenial) and generated some VPC images; uploaded them to rackspace and the all seemed to boot fine. If there was a problem, maybe it's been fixed on either the qemu or RAX side in the previous few years. Thus swith to qemu-img to generate the vhd images too. [1] https://xenbits.xen.org/gitweb/?p=xen.git;a=commit;h=5c883cf036cf5ab8b1b79390549e2475f7a568dd Change-Id: I3099d2ebb958370fcec623087a093b2c8dbdc6c4