As this issue has to do with the inability to create a snapshot on the virtual machine within the vSphere Environment, the resolution will be to determine what is preventing a snapshot from being created. Once a snapshot can be manually created on the VM (remember to remove it). The Veeam Backup & Replication job will work without issue.
Observed possible causes:
- VM is stuck in shutting down state.
- VM is in the middle of being Storage vMotioned
The following VMware KB articles have been found to be related to this error