When attempting to use the "Change Master Image" option in the machine catalog properties, the process may fail with the following error:

"Preparation of the Master VM Image failed. Make sure that the selected image is a supported OS and has a valid VDA installed"

However creating a new catalog using the same image succeeds without any issue.

Make sure that the BIOS type of the existing machines in the catalog is the same as the BIOS type of the machine whose image you are selecting in the "Change Master Image"wizard. i.e if the original machines in the catalog have UEFI boot, the new master image VM should also be UEFI boot type. 

Problem Cause

The new master image VM had a different BIOS type compared to the machines in the target machine catalog.