vSphere 6.5/6.7 Cloning a VM on a host-based storage policy with enabled data services to a VM with different host-based storage policy fails with an error

Products

• VMware Cloud Director
• VMware vCenter Server

Issue/Introduction

Symptoms:
When reviewing Tasks & Events for the failed cloning deployment you see the below error:

• The operation is not supported on the object
• Cloning a VM  with Storage I/O Control (SIOC) enabled on the datastore to datastore with SIOC not enabled. You would like to get The following error:
  “Changing or applying VM Storage Policies with Data Service capabilities during clone operations is disallowed. VM Storage Policies with Data Service capabilities can be assigned to the provisioned VM after the clone operation has been completed and before the VM has been powered on.
• This can occur for VM Encryption Storage Policies

Environment

VMware vCenter Server 6.7.x
VMware vCenter Server 6.5.x

Cause

If you create a VM that is on a storage policy that has host-based rules like IOPS or VM Encryption enabled, trying to clone the VM and change the storage policy of the target VM fails with an error Changing or applying VM Storage Policies with Data Service capabilities during clone operations is disallowed.This is a known limitation of the vSphere 6.5/6.7 release

Resolution

This issue is resolved in VMware vSphere 7.0

Workaround:

• To have a homologous setting on the datastores (source and destination) neither with SIOC enabled or not. 
• Remove the VM Storage Policies from the VM prior to cloning of the VM  and apply again after completion.