Hi, Suresh,
Yes, you should be able to generate LabVIEW code from Motion Assistant when using virtual motion controllers.  
Are you using a virtual 7358 motion controller?  If so, this might be part of the problem.  Motion 1.0.2 was released just before NI-Motion 6.0 and the 735x series controllers. For this reason, when generating LabVIEW code from Motion Assistant when axis 7 or axis 8 of the 7358 controller is being used for the move, the code generation will stop just before the first time these axes would be used.
If this is not the case, my only other suggestion is to do a repair or reinstall of Motion Assistant.  If this does not resolve the issue, please contact National Instruments technical support for further troubleshooting.
Best
 regards,
D. Putnam
Applications Engineer
National Instruments