This issue occurs if working space required to expand the disk is insufficient. The working space required for the disk expansion is the current size of the virtual disk.
Note: To view the current size of the virtual disk, go to VM > Settings > Hard Disk.
For monolithic disks, if the current size of the virtual disk is 50GB, you require an additional 50GB as working space to expand the disk size.
If you are using a split disk of 2GB, you require much lesser space because you only need to create additional 2GB split disk segments.
Note: This requirement also applies to disk expansion while using vmware-vdisk-manager.