Feature name Microsoft-Windows-Subsystem-Linux is unknown

Windows Server 2016 can't be upgraded to Windows Server 1709. You'll need a different AMI. Unfortunately AWS doesn't offer this currently.

See: https://docs.microsoft.com/en-us/windows-server/get-started/get-started-with-1709

Henning

Linux Subsystem added in version 1709 of Windows Server 2016. To verify the version of Windows you can run systeminfo | Select-String "^OS Name","^OS Version". After updating Windows to the proper version installation should work.