Why do I encounter this error in OBS Studio?

Failed to open NVENC codec: Function not implemented.

More importantly, what can I do to resolve it so that I can record?

This is a new install of OBS Studio 23.0.2 (64 bit) on Windows 7 Professional SP 1. According to Device Manager drivers for both display adapters are up to date (NVIDIA GRID K140Q & VMware SVGA 3D).

After installation I stepped through the auto-configuration wizard and the rest of the OBS Studio Quickstart guide. There are two displays. Per the guide I added one new source, a Display Capture source set to the second (non-primary) display.

After setting up the source and making it visible I can see the second monitor being captured in OBS:

But, when I click on Start Recording I encounter this dialog:

Here are the settings and full error message from the log:

12:41:26.383: [NVENC encoder: 'simple_h264_recording'] settings:
12:41:26.383:   rate_control: CQP
12:41:26.383:   bitrate:      0
12:41:26.383:   cqp:          23
12:41:26.383:   keyint:       250
12:41:26.383:   preset:       hq
12:41:26.383:   profile:      high
12:41:26.383:   width:        1920
12:41:26.383:   height:       1080
12:41:26.383:   2-pass:       false
12:41:26.383:   b-frames:     2
12:41:26.383:   GPU:          0
12:41:26.383: 
12:41:26.441: [NVENC encoder: 'simple_h264_recording'] Failed to open NVENC codec: Function not implemented