Summary:
I believe you are running into CPU and disk resource constraints Mac with what you are doing. You're also way behind on macOS updates that contain bug fixes and address severe security issues.
Discussion:
You did not post the "get info" for the hard drive, On the desktop, right click on your Macintosh HD and select Get Info.
From what I'm seeing though, you are running dangerously close to filling up your boot SSD. You have a VM that's currently taking up 40GB. If you run it so that you're adding more files to the VM, the VM's virtual hard disk can expand to a maximum of 64GB. That will require up to 20GB of additional storage that you don't have. If your Mac runs out of space on your SSD you risk corrupting your virtual machine. Also, performance is known to drop off on SSDs as they get close to being filled up.
128GB of space is not really a lot for a macOS system - especially if you want to run a virtual machine of any appreciable size. A 64GB virtual machine at its full size takes up half your disk alone. That's not including any other applications or files that you have.
You should investigate moving that VM to run on external storage (perhaps a USB3 SSD) given you have a 128GB internal SSD. Or perhaps an upgrade to the SSD (that model does not have a soldered-in SSD, so vendors like OWC/macsales.com do sell SSD upgrade kits).
Do you have Time Machine backups configured? If so, that's an even stronger argument for moving the VM off your internal SSD. For information, please open a terminal session, issue the following command, and post the results
tmutil listlocalsnaphots /
That'll tell us if there are any local Time Machine snapshots that are taking up space on your disk. Deleting those snapshots may get us a temporary release of space, but IMO it will not be enough to fix the problem.
You are also running macOS 11.1. You are way behind on bug fixes and important security fixes (bugs that are actively being exploited in the wild). You need to get that system up to macOS 11.7 - but the problem is that you don't have a lot of disk space to do it. Shut down (not suspend) the VM, move the VM bundle to an external disk (formatted as MacOS Extended or APFS) and apply software updates.
You are also running a 2 core Mac. Configuring your virtual machine to run with 2 virtual cores may be starving the Mac for CPU resources, especially if you are running any other applications.
What else are you running at the same time on this Mac when you are trying to run a virtual machine?
One other thing to check. In the virtual machine's preferences check:
- Display - if Enable 3D Accleration is turned on , turn it off and check performance.
- Folder Sharing - If enabled, disable it and see if performance changes.
If you are running any kind of third-party anti-virus software, make sure it is configured NOT to scan the folder where your virtual machines are located.
If you are using a cloud file syncing service such as OneDrive, iCloud Drive (check iCloud system preferences to see if you have it enabled , then click "Options" to see if you are allowing Desktop and Documents), or Dropbox, do NOT store your virtual machines in areas under control of these solutions. In particular, having iCloud Drive enabled and storing your virtual machine in your Documents folder is a really, really bad idea that can lead to performance problems plus virtual machine corruption.