VMware ESXi – Could not complete network copy for file – Cannot relocate virtual machine

While using Storage vMotion or vMotion, you receive this error on a newly comissioned host:

Relocate virtual machine
Status:
Could not complete network copy for file /vmfs/volumes/5924783e-c94e2bc3-f003-b8ca3a6ae820/TestVM/Test VM.vmdk

Or, when creating a VM from zero, you can’t boot it up:

Error stack:
Module 'Disk' power on failed. 
Cannot open the disk '/vmfs/volumes/60ac1656-06452eb7-aa7c-3cfdfe9ea734/Test/Test.vmdk' or one of the snapshot disks it depends on. 
The specified device is not a valid physical disk device

We know that the new VM has no snapshots, however, nothing will run on this server.

To fix this, put the server on maintenance mode.

Go to the host configuration, advanced settings and check the scratch config:

If those settings are being applied to the root of the only datastore, this will be the problem.

Eg:

Wrong
/vmfs/volume/string 

OK
/vmfs/volume/string/folder

Configure the syslog.global.logdir to point to a Datastore folder:

Reboot the host. That’s it.