Notice the three features added.
Convert cylinder to sheet metal solidworks.
This often means making your first feature a base flange but it can also make use of the convert to sheet metal command if your part is imported into solidworks or if the shape is easier to model as solid no need to use the shell command but more about that in another tech tip.
3 when all edges have been added to the two groups hit the green check.
If you cannot insert an axis then the model is not an exact cylinder and cannot be unfolded.
Sheet metal convert and flat pattern suppressed.
As a test try to insert an axis on the cylindrical face.
However sheet metal parts created with the lofted bends feature avoid this limitation and unfold appropriately.
When dealing with sheet metal parts a best practice is to define it as a sheet metal part sooner rather than later.