I noticed there were a few folks having some difficulties enabling Nested ESXi (VHV Virtual Hardware Virtualization) in the latest release of ESXi 5.1 and I thought I share some additional info and tips on troubleshooting your setup in case you are running into similar problems.

*** DISCLAIMER **** This is not officially supported by VMware, do not bother asking if it is supported or calling into VMware support for details or help.

If you wish to run nested ESXi or other hypervisors on ESXi 5.1 and run 32-bit nested virtual machines, you must meet the following hardware requirement:

• CPU supporting Intel VT-x or AMD-V

If you wish to run nested 64-bit virtual machines in your nested ESXi or other hypervisors, in addition to the requirement above, you must also meet the following hardware requirement:

• CPU supporting Intel EPT or AMD RVI

If you only meet the first criteria, you CAN still install nested ESXi or other hypervisors on ESXi 5.1, BUT you will only be able to run 32-bit nested virtual machines. When you create your virtual machine shell using the new vSphere Web Client, in the expanded CPU view, the "Hardware Virtualization" box will be grayed out. This is expected as you do not have full support for VHV, but you can still continue with your installation of ESXi or other hypervisors.

In ESXi 5.0, you may have been able to run 64-bit nested virtual machines without EPT/RVI support but performance was extremely poor. With ESXi 5.1, VHV now requires EPT/RVI.

Note: During the installation of ESXi, you may see the following message "No Hardware Virtualization Support", you can just ignore it.

If you are using sites such as Intel's ark.intel.com to check your CPU requirements, be aware that it is COMMON even for the hardware vendors to publish incorrect information about their websites. However, there is a quick way you can validate on your ESXi host whether you have full VHV support.

In vSphere 5.1, there is a new capability property called nestedHVSupported which specifies whether your physical ESXi 5.1 host has full VHV support. This property will only be true IF your CPU has both Intel-VT+EPT or AMD-V+RVI. A quick and easy way to validate this is using the vSphere MOB to retrieve the value.

To check nestedHVSupported property, please enter the following into a web browser (substitute the IP Address/hostname of your ESXi host):

https://himalaya.primp-industries.com/mob/?moid=ha-host&doPath=capability

After you login, search for the nestedHVSupported property on the page and you should see a value of either true or false. As mentioned earlier, if it is false, you might still be able to install nested ESXi or other hypervisors but you will not be able to run nested 64-bit virtual machines. I would also recommend taking a look at your system BIOS to ensure things like Intel-VT/EPT and AMD-V/RVI are enabled and sometimes it might just be as simple as a BIOS upgrade (you can always confirm by contacting the hardware vendor if you have further questions).

For proper networking connectivity, also ensure that either your standard vSwitch or Distributed Virtual Switch has both promiscuous mode and forged transmit enabled either globally on the portgroup or distributed portgroup your nested ESXi hosts are connected to.

Additional Resources: 

• How to Enable Nested ESXi & Other Hypervisors in vSphere 5.1
• How to Enable Nested ESXi & Other Hypervisors in vCloud Director 5.1