Nested virtualization - Poor Performance

Hi, I also have horrible performance when enabling nested virtualisation. What I've figured out, it looks like that the cpu cores are not correctly used. If I open a browser window it took all 8 cores on 100%.
Also strange, The CPU Usage sometimes increase up to 120%. This is unusual for windows systems.
I need to use docker for windows, and If I stop the docker engine the performance is a little bit better.

iMac 2017
Quad-Core Intel Core i7 4,2 Ghz 64 GB RAM
VM: Windows 10 32 GB RAM 8 Cores Hypervisor Parallels



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Hello. I have indicators similar to those that you dropped. Sometimes the system and processor behave very strangely. Recently I was writing my research at university using Edubirdie and opened several tabs in the browser, a couple of documents, and as a result, the processor load increased to 120%. This is very strange and I do not know how to act in this situation.
 
I had similar issues with nested virtualization where Windows VM was unusable after installing docker desktop. but it got a lot better (usable) after I unchecked the extended memory limit option
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Guys,
I'm using Parallels Desktop 17 Pro for Mac, and I'm also seeing the same problems.
I have a VM running Win 11 that was set with 8 CPU, 64GB of RAM and Apple Hypervisor. It was running super fast.
When I changed to Parallels Hypervisor (so I can enable nested virtualisation for WSL2), the VM was so slow it became impossible to use it.
I can confirm @DamienB2's tip about the .wlsconf file helped. I've limited RAM to 8GB and CPUS to 2 and it did help, however I had to reduce my VM memory to 32GB as well. Performance has improved significantly, even though it's not as good as the Apple hypervisor.

Despite all the efforts, Docker still takes a very long time to start.
 
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