Error will happen to disk upgrade for any Windows Server 2003 operating system. Please take below steps to achieve the disk upgrade,
1. Run chkdsk /f
command from a Command Prompt. Choose Y
when being asked for check disk schedule.
2. Reboot the virtual machine after step one to have the check disk run at next reboot.
3. Reboot the virtual machine twice after Step 2.
4. Upgrade the disk space again from control panel.
* We are working on the solution of this error.