Why do VM snapshots fail even when the VM is quiesced?
VM snapshot error can result from Volume Shadow Copy Service (VSS) incompatibility between Windows Server 2008 R2 and VMware ESXi 4.1. If this is the case, you'll find that you cannot create a snapshot of the quiesced virtual machine (VM), cannot back up the VM with tools such as VMware Data Recovery nor can you clone the VM. Event Viewer, or the backup application itself, will also display a snapshot or VSS error.
More resources on VM snapshots
Everything you wanted to know about VMware snapshots
Getting to know the snapshot process in Hyper-V
Going beyond snapshots to protect VMs
To address this problem, you can patch ESXi to Update 1 or a later fix that corrects VMware's use with VSS. Validating a hypervisor update for production can take some time. While you wait, disable VSS-based snapshots and use file-system quiesced snapshots instead.
First, power off the VM and log in to either vCenter Server or the ESXi host. Then edit the VM's options so that the disk.EnableUUID flag is false, and reboot the VM. Only technicians familiar with configuring VMs under ESXi should perform this type of procedure.
Virtualization provides a variety of options for protecting VMs, but admins must take the limitations into consideration. An IT staff will need to rely on virtualization-aware backup tools, but the process can also be augmented and tailored with VM snapshots to proxy systems, which offers less workload disruption as well as additional layers of protection.
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