Hi, @Mike Crowley Thanks for the question and for using the MS Q&A platform sorry for the inconvenience caused.
As we understand the ask here is you want to know why the failure occurred while moving the Azure SQL virtual cluster to another resource group within the same subscription.
Unfortunately, this is not supported, Internal product team is working on the set of improvements for the virtual cluster and this is part of the scope, however, the expected timeframe is Q3 this CY.
A virtual cluster always ends up in the same resource group as the virtual network used for instance deployment, depending on the organization of the resources on your side, you would have either to re-create the resources or eventually move the instances to another subnet which is in another resource group.
please refer to this document for more information.
Can you please tell me what are you trying to achieve? Move the entire environment to another resource group or move only the virtual cluster?
Please let me know if you need any additional information.
Regards
Geetha