This issue is replicated on Apple Macbook Pro M1, inside Parallels environment. See relevant thread on Microsoft Website
Old Description
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There is an issue with Windows 11, SQL Server does not work properly on it. SQL needs to be installed on second drive (if there is one) that seems to solve the problem.
If you are using Windows 11 in virtual environment, there may not be any work around, it will not work in Parallels or any other VM in Windows.