Failed to attach disk 'C:\Users\bijay\AppData\Local\Packages\CanonicalGroupLimited.Ubuntu20.04LTS_79rhkp1fndgsc\LocalState\ext4.vhdx' to WSL2: The APPX file can not be accessed because it is not encrypted as expected. Error code: Wsl/Service/CreateInstance/MountVhd/0x80070199

[drbijaykumarsingh]

Tried the PowerShell method everything worked fine, The virtual disk shrunk from 48GB to 28GB, but when tried to launch wsl it didn't work and the following error showed up

Failed to attach disk 'C:\Users\bijay\AppData\Local\Packages\CanonicalGroupLimited.Ubuntu20.04LTS_79rhkp1fndgsc\LocalState\ext4.vhdx' to WSL2: The APPX file can not be accessed because it is not encrypted as expected.
Error code: Wsl/Service/CreateInstance/MountVhd/0x80070199

Is there a way to fix this or all my data is gone??

[tie-pilot-qxw]

Hello there! I encountered the same error message
But I managed to resolve it, and I hope my solution can help you and other people, though it has been 2 years.
Solution

1. Move the Virtual Disk to Another Directory
   Locate the WSL2 virtual disk file ext4.vhdx. It is usually found at the following path:
   C:\Users<YourUsername>\AppData\Local\Packages<WSLDistributionPackageName>\LocalState
   Cut the ext4.vhdx file and paste it into another directory (e.g., your Desktop or any other folder).
2. Copy the Virtual Disk Back to the Original Location
   After moving it to another directory, copy the ext4.vhdx file back to its original location:
3. This process of moving the file out and then back in seems to reset some internal references and should resolve the issue.