Isn't case insensitivity a Win32 thing only? I would not expect it to impact stuff in Hyper-V or the windows kernel. AFAIK for example NTFS is case-sensitive.
NTFS supports case-sensitivity, but if you have case-sensitive distinctions in a directory that's marked case-insensitive, bad things happen. (Those bad things are probably entirely deterministic, theoretically-predictable, and documented in one of Raymond Chen's big books of Windows sadness, but that doesn't mean I want to deal with them as a mere mortal.)
