ZFS – How to Migrate a ZFS Pool to Windows Storage Spaces

Assuming you are definitely using a fault-tolerant mode such as parity or mirror, then that error should not be possible. I was able to reproduce that error in a striping setup with a disk I have that I know is bad. So either you're set up for striping, or you found a bug. I would involve Microsoft at this point, if you haven't already.

It is not possible to have the virtual disk come back online until a replacement hard disk has been allocated once the failed disk has been retired.

To quote technet:

You can't remove a disk unless sufficient unallocated capacity and a sufficient number of disks are available to successfully repair the storage spaces that depend on the disk.

It may be possible to re-insert the failed disk and let the Storage Space rebuild on that for the time being, however it is a much better solution to wait for the replacement disk if downtime for the volume is acceptable.

To avoid this issue in the future only retire a disk once a replacement has been added to the physical system, Storage Spaces will not make use of a disk once it has been marked as failed. Full instructions and the procedure here.