Creation of an MCS machine catalog failes with the following error:

XDDS:A1338B34
Exception: DesktopStudio_ErrorId :
ProvisioningTaskError ErrorCategory : NotSpecified
ErrorID : FailedToReadDiskFromPreparationVm
TaskErrorInformation : Terminated
InternalErrorMessage : The remote server returned an error: (500) Internal Server Error. 

1. Re-install the VDA software on the master image and ensure the machine identity service is installed.
2. When preparing a Single Session OS image (e.g. Windows 10), to ensure this is installed when, please use either the installer presented by the ISO when clicking autoselect.exe or the standalone installer VDAWorkstationSetup.exe on the ISO. 
3. Do not use the VDAWorkstationCoreSetup.exe standalone installer, as this does not contain the required machine identity service component.
4. For Multi-Session OS (e.g Windows Server, Multi-Session Windows 10), you can use the installer presented by autoselect.exe from the install ISO or use the standalone VDAServerSetup.exe
5. For a GUI based install - at the initial "Environment" screen, the component will be installed if the  "Create a Master MCS image" option is selected.
6. For a command-line based install, run the installer with the /mastermcsimage option
   • See: https://docs.citrix.com/en-us/citrix-virtual-apps-desktops-service/install-configure/install-command.html

Problem Cause

Machine Identity Service not installed