Setting the MAPI machine set status AuthoritativeAPI: MachineAPI, will create the CAPI MachineSet from the MAPI one.
Add labels for mapi machineset, for now this is only supported in mapi, that is not present in capi.

Logs show failed to convert MAPI machine set to CAPI machine set: spec.metadata.labels[key3]: Invalid value: \"value3\
but mapi machineset status no update

always   

1. Update featuregate
  featureSet: CustomNoUpgrade
  customNoUpgrade:
    enabled:
    - MachineAPIMigration      
2. Update mapi machineset spec.authoritativeAPI: MachineAPI
3. Manually update mapi machine set status authoritativeAPI: MachineAPI     4. Once capi machineset was created and stable, update mapi machineset to add label
    spec:
      authoritativeAPI: MachineAPI
      lifecycleHooks: {}
      metadata:
        labels:
          key3: value3
     

Logs show failed to convert MAPI machine set to CAPI machine set: spec.metadata.labels[key3]: Invalid value: \"value3\ , but mapi machineset status no update

E0107 07:13:58.660546       1 controller.go:316] "Reconciler error" err="[failed to convert MAPI machine set to CAPI machine set: spec.metadata.labels[key3]: Invalid value: \"value3\": label propagation is not currently supported for this label, failed to patch MAPI machine set status with synchronized condition: MachineSet.machine.openshift.io \"zhsun-27-zv8vh-worker-us-east-2a\" is invalid: status.synchronizedGeneration: Invalid value: \"object\": synchronizedGeneration must not decrease unless authoritativeAPI is transitioning from Migrating to another value]" controller="machineset" controllerGroup="machine.openshift.io" controllerKind="MachineSet" MachineSet="openshift-machine-api/zhsun-27-zv8vh-worker-us-east-2a" namespace="openshift-machine-api" name="zhsun-27-zv8vh-worker-us-east-2a" reconcileID="90bbbde9-d7d9-4f2f-bc59-074b6f97d922"

status:
  authoritativeAPI: MachineAPI
  availableReplicas: 1
  conditions:
  - lastTransitionTime: "2025-01-07T06:47:14Z"
    message: The AuthoritativeAPI is set to MachineAPI
    reason: AuthoritativeAPIMachineAPI
    severity: Info
    status: "False"
    type: Paused
  - lastTransitionTime: "2025-01-07T06:47:14Z"
    message: Successfully synchronized CAPI MachineSet to MAPI
    reason: ResourceSynchronized
    status: "True"
    type: Synchronized
  fullyLabeledReplicas: 1
  observedGeneration: 2
  readyReplicas: 1
  replicas: 1
  synchronizedGeneration: 1

The status should have been updated to FailedToConvertMAPIMachineSetToCAPI