"Fast-provisioned VMs cannot be placed at the disk level"The issue is because the VDC is fast provisioned, which means all disks of a VM along with vmx file should stay on a single datastore while the vmx/vm disks of existing VMs are on a separate datastore and that's why this error occurs
To resolve the issue, either disable fast provisioning on the Org VDC or move disks/vmx file of the existing VMs to a single datastore