Your issue is due to the fact that Hypervisors are not Emulators, and you're using the wrong OS image.
First, Hypervisors vs Emulators
Windows 11 has an ARM version that appears to be pretty decent, and I seem to recall Windows 10 also had an ARM version, but it was not so well matured, and the version you're trying to install is almost definitely not the ARM version.
A Hypervisor, which is the software that allows Virtual Machines to run inside another OS or on a host, "virtualizes" the hardware available on that host and presents it to the VMs you run on the Hypervisor. The Hypervisor can only present hardware types aligned to those of the physical host.
An Emulator, on the other hand, interprets the instruction intended for one type of system architecture into instructions that are understood on another architecture.
In order to run the AMD64-based instructions your Windows OS is trying to use into the ARM-based instruction set your Mac book speaks natively, you'll need an emulator, but I don't believe that exists yet for this specific purpose.
Second, options and solutions
Online guides, and Microsoft, agree that Parallels is the best, and only "official" way to run Windows 11 ARM on your M- based Mac. This software has a dedicated wizard for this process and removes all the guess-work.
A free option that is regularly recommended is the UTM app.
I wasn't able to find a step-by-step guide for VMWare VirtualBox, but VB does support the M chips now, and some articles do specifically reference this being a viable free option.
However, you will need to join the Insider Preview program with Microsoft and use the Windows for ARM image (https://www.microsoft.com/en-us/software-download/windowsinsiderpreviewarm64).