You may need to make sure the right Windows features are enabled to allow hosting virtual machines (which is how WSL2 functions underneath). In particular:

The Virtual Machine Platform and Windows Subsystem for Linux features must be enabled in Turn Windows features on or off. The panel is accessed by hitting Start and typing “features” or from the Programs and Features icon in the classic Control Panel.

quoted from https://www.sitepoint.com/wsl2/

It's likely these settings were restored to the default (off) if you reset your Windows installation.