I would avoid deleting anything unless you're sure that's the reason.
There's a vswap file in there so presumably the VM is powered on - powering it off should get you some additional space, if that is indeed the problem.
What do you see in the vmkernel.log at /var/log after the failed operation? Can you take a copy of that file and attach here?
One other point for now - you mention that you tried the operation directly on a host. It seems from a note here that the host you choose is significant:
Did you attempt the operation from the host where the powered-on VM is registered?