I might do this instead to avoid any bug/flaw in any of the conversion tool:
- Create an attach another VHDX to the VM
- Attach a live iso to the VM and boot that instead of the installation
- Partition and format the virtual disk attached in step 1 as NTFS or exFAT and mount the filesystem
- Use
dd or even just cat to dump a raw image of the virtual disk where the installation resides to the filesystem mounted in step 3; you might even optionally use tee additionally to perform a checksum (e.g., sha1sum on-the-fly
- Unmount and shutdown; detach the VHDX that contains the image from the VM and attach it to the host; optionally perform a checksum (with 7-zip or whatever) and compare with the one you got in step 4
Then you can use whatever writer tool you like on Windows to write the raw image to a USB flash drive.
If you have set up SMB share or so on the host, you can probably dump it directly over the virtual network to a volume on your host instead.
It might even be possible to attach the VHDX of the installation (in read-only mode) to the host and perform a direct drive-to-drive clone. I'm not familiar with tools on Windows though so I don't know if there's one can do that.
Note that ISO as in ISO9660 has nothing to do with any of the above or your story / case.