Same thing happens to me. This error apeares with my vSphere 70u2 lab.
To confirm that your problem is the same I had, after the failure type this:
kubectl get virtualmachines
You will see the first virtual machine that your YAML tries to deploy. After that, type this:
kubectl describe virtualmachine <<name_of_virtual_machine>>
In my case I saw the following error: VirtualMachineClassBindingNotFound. This is because of the introduction of the VM Service in vSphere 7.0u2. In this version, when you create a new Namespace, no VirtualMachineClass is associated by default. You must do it manually.
Go to vSphere Client, click in your namespace, Summary, you will find this:
Click on "Manage VM Classes" and assign those you want. Then you can use those classes on your Yaml file.
Hope this helps.
D.
