Hey,
This is pretty common and works as it should. The way the discovery of virtual machines (or any virtualized hardware) works is twofold:
1) Discovery of the virtualized hardware
The "normal" horizontal discovery will find virtualized objects within your infrastructure and create those accordingly. The discovery itself will always work bottom-up (contrary to the service mapping which works top-down). This leads to the initial host to be "the bottom". In this case, this is the virtualized server. The discovery will only inventorize whats running on the server and what it connects to. It treats virtualized servers the same way as "normal", non-virtualized servers.
2) Discovery of virtualizing hardware/software (e.g. VMWare)
Part of the discovery will also be the discovery of a server which is running a virtualizing management system (e.g. VMWare). Again, bottom-up. Ergo, the server is discovered, then the discovery will find VCenter running on it (to stick with the example) and discover that. Then the VCenter discovery is triggered, which uses the VCenter management API to inventorize the virtualizing structure.
Part of that discovery via the API is also creating vm instance records as CIs. IF there is a matching server record (in the cmdb_ci_server table) a relationship will be created through this step.
This is also true for other virtualizing systems (and also for cloud discovery).
You will always need both of these steps to work. The second step will usually then create the relationship. The reason why the first one doesn't is due to information for the virtualizing infrastructure not being available through the host discovery itself but rather only through discovering the virtualizing or managing host(s).
In your case make sure, that the discovery is also able to discovery the servers for your management system and has the additional credentials to discover the virtualization system.
Hope this helps
Regards
Fabian
ps.: To find out what you need, the documentation regarding the discovery is product specific and in depth. E.g. you will be able to find how to discovery VMWare by checking the documentation from ServiceNow.
