I checked the rearm count, as described in the kb, and on the template it actually said 999. Maybe it has changed in Server 2012 R2? Anyhow it doesnt seem to be the problem.
I changed the network adapter to VMXNet3 and that did make a change. Now, when the srever starts up it displayes a massega saying "Preparing Automatic Repair" and then starts up in the standard repair mode where I can select "Continue", "Troubleshoot" or "Turn off you PC".