Azure Virtual Machine Scale Set error: The selected virtual network has a default subnet with a reserved name

I had the same problem and contacted support. Though i did not find out what the "default" subnet would be and how it was chosen, we found a workaround while they escalate the issue.

You can create the VMSS using az cli (and i assume also using the powershell module) like this:

az vmss create \
-n <vmss-name> \
-g <resource-group-name> \
--image Win2019Datacenter \
--location <location> \
--instance-count 0 \
--disable-overprovision \
--upgrade-policy-mode manual \
--lb "" \
--computer-name-prefix "prefix-" \
--vm-sku "Standard_D4s_v4" \
--public-ip-address "" \
--subnet /subscriptions/<subscriptionid>/resourceGroups/<resource-group-name>/providers/Microsoft.Network/virtualNetworks/<vnet-name>/subnets/<subnet-name> \
--admin-username username \
--admin-password "whatever"

Check az vmss create --help for the full list of parameters. My guess is it is a glitch in the portal, which will be fixed soon.