Just in case anyone else finds this, here is your answer
Usually it is your EFI partition that cannot create the vhdx file,
the issue stems from the small size of the original EFI partition.
The easiest way to resolve this is to move your recovery partition to the end of the drive.
Then use that open space to expand your EFI partition,
you will need a 3rd party tool, or you will have to recreate the EFI partition.
New minimum partition sizes are as follows EFI 260 MB, Recovery 1.26 GB.
To move the recovery partition to the end of the disk.
First backup BCD
Then make room on the end of the disk to about 1.26 GB = 1260 MB
Create the new recovery partition and format NTFS but DO NOT give it a drive letter
(it will never go away if you do, must re-create)
Admin\CMD run reagentc /disable
Admin\CMD diskpart
list volume = identify the volume # for the New Partition
Usually #4, will be listed as a Primary partition
select volume # = where # found from above
UEFI set id=de94bba4-06d1-4d40-a16a-bfd50179d6ac
UEFI gpt attributes=0x8000000000000001
exit
reagentc /enable
reagentc /info to confirm recovery is on
If you need to resize the EFI partition you can use MiniTool, just make sure it is a tested version
Then to need to reconfigure your backup or it will fail, if this is a server