Replication is writing data to 2 different datastores on the Target host. The replicaton job is writing configuration files of the replica VM to Datastore_1 and the vmdk files are being written to Datastore_2.
During the replication wizard job setup under "Select which Hard Disk(s) to replicate" The Primary Datastore was set to Datastore_1 and the Target vmdk are set to Datastore_2. This caused the Configuration file to be written to Datastore_1 and the vmdk files written to Datastore_2.
In order to have the Configuration files and the vmdk files written to the same Directory. Both the Primary Datastore and target vmdk must match.