Hey @cskim!
I just set up unRaid today. My Windows VM is running from a bare metal install on an SSD. I had the "Sorry, this application cannot run under a Virtual Machine." issue, but after adding
<feature policy='disable' name='hypervisor'/>
I was able to successfully play Genshin Impact.
I did face some lag when I moved my view, but that was because my Logitech mouse report rate was too high.
After lowering the report rate to around 250 I can now play on high settings without any lag.
My version is 1.3