If you use a Virtual Machine as the basis for a template in System Center Virtual machine Manager 2008 or 2008 R2, do not use one that uses
a differencing disk. If this happens, it will break the disk chain for the destination virtual machine and will remove the parent disk.

The end result will be orphaned differencing disks and the virtual machine will be put in an incomplete VM Confguration state. It will
also, subsequently fail to start. This happens whether you use the SCVMM console or through the PowerShell cmdlets.

Bottom Line: DON'T DO THIS!