I am using Android Studio 2.3.3, Android SDK tools v26.0.2 and HAXM 6.2.1 emulator.
edit (2017/11/10 update): Also tried using Android Studio 3.0, Android SDK tools 27.0.1, HAXM emulator 6.2.1, x86 Google Play.
I downloaded the Android 8.0 platform (O, API level 26, version 2) and created a new emulator:
Create-> Phone-> Nexus 5X with Play Store support-> Image x86 API 26 (Google Play), standard settings:

After loading the emulator, I get a message in the notification tray that says "Unsupported virtual SD card. This device does not support this virtual SD card. Click to configure in a supported format."

I do this and select internal or external storage and then I get an error:

10-09 13:31:59.786 2984-2984 E/StorageSettings: Failed to partition java.lang.IllegalStateException: command '10 volume partition disk:253,48 public' failed with '400 10 Command failed'
Complete mistake and all around:
10-09 13:31:58.397 1506-1594 E/TaskPersister: File error accessing recents directory (directory doesn't exist?). 10-09 13:31:58.566 2984-3021 D/EGL_emulation: eglMakeCurrent: 0xa1a99fe0: ver 2 0 (tinfo 0xa1d7f920) 10-09 13:31:58.608 1356-1356 D/gralloc_ranchu: gralloc_alloc: Creating ashmem region of size 4096 10-09 13:31:58.731 1506-2285 I/ActivityManager: START u0 {cmp=com.android.settings/.deviceinfo.StorageWizardFormatProgress (has extras)} from uid 1000 10-09 13:31:58.753 1506-1519 E/memtrack: Couldn't load memtrack module 10-09 13:31:58.753 1506-1519 W/android.os.Debug: failed to get memory consumption info: -1 10-09 13:31:58.775 1506-1655 D/VoldConnector: SND -> {10 volume partition disk:253,48 public} 10-09 13:31:58.775 1310-1314 V/vold: /system/bin/sgdisk 10-09 13:31:58.775 1310-1314 V/vold: --zap-all 10-09 13:31:58.775 1310-1314 V/vold: /dev/block/vold/disk:253,48 10-09 13:31:58.779 1310-1314 I/sgdisk: Creating new GPT entries. 10-09 13:31:58.790 1356-1356 D/gralloc_ranchu: gralloc_alloc: Creating ashmem region of size 4096 10-09 13:31:58.795 1356-1356 I/chatty: uid=1000(system) allocator@2.0-s identical 1 line 10-09 13:31:58.800 1356-1356 D/gralloc_ranchu: gralloc_alloc: Creating ashmem region of size 4096 [ 10-09 13:31:58.807 2984: 3021 D/ ] SurfaceInterface::setAsyncMode: set async mode 1 10-09 13:31:58.812 2984-3021 D/EGL_emulation: eglMakeCurrent: 0xa1a99fe0: ver 2 0 (tinfo 0xa1d7f920) 10-09 13:31:58.819 1506-1527 I/ActivityManager: Displayed com.android.settings/.deviceinfo.StorageWizardFormatProgress: +67ms 10-09 13:31:58.821 2984-3021 D/EGL_emulation: eglMakeCurrent: 0xa1a99fe0: ver 2 0 (tinfo 0xa1d7f920) 10-09 13:31:58.829 2984-3021 D/EGL_emulation: eglMakeCurrent: 0xa1a99fe0: ver 2 0 (tinfo 0xa1d7f920) 10-09 13:31:58.839 2984-3021 D/OpenGLRenderer: endAllActiveAnimators on 0xa1d0da00 (RippleDrawable) with handle 0xa19fd2e0 10-09 13:31:59.784 1310-1314 I/sgdisk: GPT data structures destroyed! You may now partition the disk using fdisk or 10-09 13:31:59.785 1310-1314 I/sgdisk: other utilities. 10-09 13:31:59.785 1310-1314 E/config_mbr: Not enough space to add parttion 'android_sdcard'. 10-09 13:31:59.785 1310-1314 E/diskconfig: Configuration is invalid. 10-09 13:31:59.785 1310-1314 E/vold: Failed to apply disk configuration: 1 10-09 13:31:59.785 1506-1565 D/VoldConnector: RCV <- {400 10 Command failed} 10-09 13:31:59.785 1506-1655 E/VoldConnector: NDC Command {10 volume partition disk:253,48 public} took too long (1010ms) 10-09 13:31:59.786 2984-2984 E/StorageSettings: Failed to partition java.lang.IllegalStateException: command '10 volume partition disk:253,48 public' failed with '400 10 Command failed' at android.os.Parcel.readException(Parcel.java:1950) at android.os.Parcel.readException(Parcel.java:1888) at android.os.storage.IStorageManager$Stub$Proxy.partitionPublic(IStorageManager.java:1865) at android.os.storage.StorageManager.partitionPublic(StorageManager.java:878) at com.android.settings.deviceinfo.StorageWizardFormatProgress$PartitionTask.doInBackground(StorageWizardFormatProgress.java:118) at com.android.settings.deviceinfo.StorageWizardFormatProgress$PartitionTask.doInBackground(StorageWizardFormatProgress.java:93) at android.os.AsyncTask$2.call(AsyncTask.java:333) at java.util.concurrent.FutureTask.run(FutureTask.java:266) at android.os.AsyncTask$SerialExecutor$1.run(AsyncTask.java:245) at java.util.concurrent.ThreadPoolExecutor.runWorker(ThreadPoolExecutor.java:1162) at java.util.concurrent.ThreadPoolExecutor$Worker.run(ThreadPoolExecutor.java:636) at java.lang.Thread.run(Thread.java:764)
I tried to delete and recreate this image, update Android Studio, update Android Tools and update the SDK. This works great with API 23 and 24 emulators. Has anyone seen this before or had any ideas on what I can try?