To prepare a key vault for Azure Disk Encryption, you need to select Azure Virtual machines for deployment and select Azure Disk Encryption for volume encryption in the key vault access policy settings. These options enable the VMs to access the keys and secrets stored in the key vault for disk encryption. Creating a new key or secret is not required, as Azure Disk Encryption can generate them automatically. Configuring a key rotation policy is optional and not related to preparing the key vault for disk encryption. Reference: https://learn.microsoft.com/en-us/azure/virtual-machines/windows/disk-encryption-key-vault https://learn.microsoft.com/en-us/azure/virtual-machines/disk-encryption-overview https://learn.microsoft.com/en-us/azure/virtual-machines/windows/encrypt-disks