I have tested the proposed kernel, but with this version both bugs are
showing up.

Could it be that the bug is not in the kernel, but in systemd?
Below is a comparison of the strace command ran on RHEL 7.3 and Ubuntu 16.04.1, 
when trying to re-enable the Data Exchange integration service: 
http://pastebin.ubuntu.com/25615867/

Since manually starting the daemon after re-enabling the integration service 
works fine, could it be that systemd doesn't handle the daemon starting process 
when it receives the call to do so?
Is there any way to see how systemd handles the call to start the daemon?

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https://bugs.launchpad.net/bugs/1701222

Title:
  [Hyper-V] LIS daemons fail to start after disable/re-enable VM
  integration services

Status in linux package in Ubuntu:
  In Progress
Status in linux source package in Xenial:
  In Progress
Status in linux source package in Zesty:
  In Progress
Status in linux source package in Artful:
  In Progress

Bug description:
  Issue description: Hyper-V daemons fail to start after disable/re-
  enable VM integration services.

  Platform: host independent
  Affected daemons - KVP, FCOPY and VSS.

  Distribution name and release: Ubuntu 16.04, Ubuntu 17.04
  Kernel version: 4.11.0-rc7-next-20170421 (for Ubuntu 16.04), 
4.10.0-19-generic (for Ubuntu 17.04)

  Repro rate: 100%

  Steps to reproduce:
  1.    Start VM with Guest Services enabled (FCopy daemon starts automatically)
  2.    Go to File > Settings > Integration Services, uncheck Guest Services 
and apply (FCopy daemon will stop at this point)
  3.    Re-enable Guest Services from VM Settings (Fcopy daemon is not running).
  This is the issue. systemd monitors for the service and if we have the hook 
for the Guest Service, it tries to start the daemon again.
  systemd attempt to start any of the LIS daemons will fail, but manually 
executing the daemon binary, it will start the daemon.

  Additional Info:
  - the steps above can be repro'd with KVP / Data Exchange integration service 
as well.
  - Manually starting hv_fcopy_daemon works fine.
  - other distros (RHEL) does not have this behavior, the LIS daemons are 
started automatically by systemd once we re-enable the integration service.

  On the upstream kernel and the upstream hv daemons, these messages are 
recorded in syslog, once we re-enable the Guest service:
  HV_FCOPY: pread failed: Bad file descriptor
  systemd[1]: hv-fcopy-daemon.service: Main process exited, code=exited, 
status=1/FAILURE
  systemd[1]: hv-fcopy-daemon.service: Unit entered failed state.
  systemd[1]: hv-fcopy-daemon.service: Failed with result 'exit-code'.

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