Please help me understand how Win11 is screwing this up

This is a picture of the properties of a particular VM I want to back up.

This is a picture of an external HDD I have, which is completely empty (obviously).

This is the error I get when I try to copy the above VM to the above external HDD.

Clearly Win11 is totally screwing up space calculations here.

Any idea how, why, and how to fix it?