I am taking the "ArcGIS for Server: Sharing GIS Content on the Web" course as we speak. We found a solution to the problem; Restart or Stop/Start the ArcGIS server connection. In Windows: Right-click My Computer. Click Manage. Expand Services and Applications tab. Click Services. Find "ArcGIS Server". Stop it, wait a few seconds and start it again. Now you should be able to publish your service. I have to say that the message "Packaging failed" was abit misleading tho. this worked for me Thanks!!
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