According to the error that you have mentioned, You can not pass through a PCI device when the hardware virtualization feature of CPU is enabled, so you should check your VM configuration to be sure that "Expose hardware-assisted virtualization to the guest OS" is disabled.
I hope this could be helpful
I think I didn't make it clear that I WANT to do that behavior, and that I could do it in previous versions. (yes in 6.7, they removed the feature, and require a flag...)
I'm wanting to enable passthrough as well as nested virtualization the same time in the most recent version as well.
There is another tag in ESXi 6.7 u2, so I believe it can be used in vSphere7
If you didn't use this tag just give it a try:
vhv.allowPassthru = "TRUE"
I hope it could be helpful
Please share any solution if the problem was solved
Adding in this advanced config flag didn't allow the VM to boot either. It continues to get the same error.
Any other ideas?