Hyper-V, Windows 2008 R2, and 'MyVM' could not initialize error

There appears to be an issue with w08r2 when it comes to using Hyper-V. When attempting to launch your VM you might encounter the error: The application encountered an error while attempting to change the state of %yourVM%.

The solution seems very simple (thanks to this post) which is that you need to give 'Authenticated Users' the 'List folder / read data' permission at the root of the drive that contains the Virtual Machines (and you ONLY need to do it at that level, not the ones below).

Why this solves the problem I do not know, but here are the steps (with some pictures) to walk you through the process:

1 - Open up the root of the drive's properties and choose the Security tab. Click on the Advanced button

2. Click on 'Change Permissions'

3. Click on 'Add', Type in 'Authenticated Users' and hit the OK button, you should see the screen below. Change the "Apply to:" to be "This folder only" and put a check in to the "List folder / read data" check box. Click 'OK'

4. Make sure NOT to check the 'Replace all child objects...' checkbox. Check your settings, and click OK. Click OK to close the Properties screen for the drive and you should be good to go.