Challenge
Proxy VM is no longer processing VMs over Virtual Appliance mode (Hotadd) or does it randomly after upgrade to v9 despite all requirements are met
Cause
Starting with v9 Veeam B&R is using VDDK 6.0 in order to communicate with VMware infrastructure. This version of VDDK libraries introduced additional logic to validate possible transport modes on a proxy. This validation procedure for Virtual appliance (Hotadd) fails on this proxy because BIOS UUID isn't unique. Most likely there is a replica of a proxy VM registered within same vCenter Server.
Solution
Due to this additional check implemented in the VMware VDDK 6.0 it is advisable to either stop replicating Veeam B&R or proxies within same vCenter or replicate them to standalone ESXi hosts added explicitly to the Veeam server. In order to protect your Veeam B&R server please use Configuration Backup job (see more details: https://helpcenter.veeam.com/backup/hyperv/vbr_config.html).
More Information
HotAdd skipped if proxy has same BIOS UUID as the target VM.
The VixDiskLib_ConnectEx function contains a pre-check for HotAdd to validate that the proxy is virtual machine. (HotAdd is not allowed on physical machines.) If the proxy VM and the target VM have the same BIOS UUID, validation fails because multiple VMs are returned from pre-check. This results in skipping HotAdd mode and reverting to another transport. The workaround is to make the BIOS UUID keys unique.