That explains it. Partitions can only be resized with adjacent free disk space.
It would be interesting to find out what's on this partition, i.e. whether it is required.
In case it's needed, you could use e.g. a gParted Live CD/ISO, and move this partition to the end of the disk, so that the free disk space can be used to increase the C: partition. If the partition isn't required you may consider deleting it.
In any case you should have a backup of the current VM, and create a snapshot prior to modifying the partitions.
André