"NSX backup should not be located on SDDC Manager. Please reconfigure NSX backup to use another location" error as seen in the below snippet:
VMware Cloud Foundation 5.x
Currently, the NSX backup is configured to use the SDDC Manager (default configuration).
The customer does not have an external SFTP server due to their security and compliance policies.
.Using SDDC Manager as backup target for NSX shouldn’t stop any upgrades, if the backups are completed successfully on NSX UI, you may ignore this error and proceed with the upgrade