This article describes the supported format (VHD or VHDX) for User layers.
Previously, User layers were created using the VHD format.
From App Layering 2309, User layers are now created using the VHDX format instead of the VHD format.
If you still want to create new user layers using VHD format as in the previous release, you can change the behavior by setting the following system registry parameter:
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Path: HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Services\ulayer
Name: DefaultUserLayerVHDXDisabled
Type: DWORD
Data: 1
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Tech Brief: User Layer Management Utility - Converting VHD to VHDX
https://community.citrix.com/tech-zone/learn/tech-briefs/user-layer-management-utility-vhd-conversion/