HOWTO: Disable complex password policy on Hyper-V Server 2008?

You can export security settings with:

secedit /export /cfg X:\new.cfg

Then you edit new.cfg (it is ini format) and change line "PasswordComplexity = 1" to "PasswordComplexity = 0". Apply it on Hyper-V server with:

secedit /configure /db C:\Windows\security\new.sdb /cfg X:\new.cfg /areas SECURITYPOLICY

You can find more details in this blog post.