FWIW, I strongly prefer using an ISO -- download it, mount it in Windows, then run setup.exe. There are just too many variables with Windows Update -- the Windows Update process itself may suffer problems, download speeds and consistency varies and so on. With an ISO I Know everything's there. Afterward everything from your old install is in Windows.old, so if anything is missing you can copy it from there. Otherwise I've found that Win11 is pretty darn good at migrating everything from the old install -- in fact, your odds are Much better that everything will work than installing Win11 fresh and adding that stuff afterward.
That said, while all your software should be compatible, drivers may not be, or Windows may install the wrong driver. As a precaution I always copy the Windows\ System32\ Driverstore\ FileRepository\ folder to a USB stick/drive, so I have everything & can install whatever with the exception of the graphics driver, which usually will not install from what's stored in that folder. If you were really paranoid you could browse through Device Mgr., and Google to see if individual components were known to work with Win11 24H2, if new drivers were available etc. For stuff like touch screens, cameras, network & WiFi adapters, 3rd party motherboard chipsets like audio or Asmedia, you *might* want to note the chip IDs & drivers used as listed in Device Mgr. -- I've seen Windows setup get those wrong, misidentifying the hardware and using wrong drivers. But again, that depends on your level of paranoia.
One thing Windows setup gets wrong maybe a third of the time in my experience is the Recovery Partition. It may add a new one -- I've seen 3 accumulate -- it may or may not work, and since it's often before the old Recovery partition, if you delete the old one, move the new one, and enlarge C:\, it may no longer work. At the Command Prompt reagentc /info will tell you if it's working, while reagentc /enable *may* turn it on if it isn't.
As Chris said, Windows activation should be tied to your hardware and *Microsoft account* -- if you don't have/use a Microsoft account for Windows that's not necessarily true. That does Not mean it always works like it's supposed to -- Google and you'll find all sorts of tips for when that happens.
FWIW Chris, O&O DiskImage Pro lets you backup to either their proprietary VHD format or Microsoft's .vhd files. Quite a few advantages compared to Disk2vhd, sometimes really cheap on sale, and version 17 [19 is current] is sometimes given away.
