On a Dell PowerEdge R710 had this error when trying to install Windows Server 2008 R2 Setup.
Fails when selecting the disk: “setup was unable to create a new system partition.”
All seems to be fine up until that point then it just fails. Even booting from the Dell utility CD gives the same problem.
It turned out to be two separate things, one is the “Virtualisation Technologies” setting, and the other is the internal vFlash card. If either of these is enabled it seems to cause it to fail.
Start the BIOS of the server then do the following:
- Processor Settings->Virtualization Technologies-> Set to Disabled
- Integrated Devices->Internal SD Card Port-> Off
Now restart the setup and you should have no problems.