Quiesced backup fails with "Error Message: API call failed with message: A snapshot operation cannot be performed"
If the issue turns out to be the size of the snapshot file being created is larger than the available free space on the datastore, you will need to free up space on the datastore or migrate the virtual machine to a datastore that contains enough free space fot the snapshot.
If the virtual machine disk size is larger than what the block size of the datastore supports, you may need to change the working directory of the virtual machine, ESX or ESXi versions prior to 5.x, or vMotion the storage to a datastore with a larger block size which supports the virtual machine disk size.