This is a very simple problem to fix, when you build your new virtual appliance from OVF, one of the question you are asked is the host name of your new Virtual Appliance. Lets say in my example it is VCAPP. Once it is built you then try and configure it for active directory authentication only to see the following error.
Remember how during the build I called my Virtual Appliance VCAPP? The issues is I dont not give it the full FQDN on my domain, most people presume like windows machines that the FQDN will be added. To change log into the Virtual Appliance on port 5400 and then select Network > Address and change the host name accordingly as seen below.
Now when you go to select active directory authentication you will be able to successfully enable it.