Traditionally, the radiated microwave frequency in a coaxial vircator is considered to be determined primarily by the virtual cathode oscillation frequency and the electron reflection frequency. However, some experiments at TTU show that the interaction between the virtual cathode oscillation and the cavity is a key in determining the microwave frequency and propagating mode. Particularly, we observe that the E-beam plays an important role in the cavity formation. Some possible explanations, including a virtual cavity concept, are proposed. The cavity resonance effect on a coaxial virtual cathode oscillator has been investigated in detail. The understanding of the E-beam characteristics is critical in optimizing the design of the cylindrical diode to avoid the microwave frequency shifting and mode competition.