I just got it finally working and you have to put the VMDK and IMG file in the same datastore folder for it to work. I do see the 50MB drive now as a HDD in DSM and think I need to edit the grub file to hide it from there. But, don't know how to get the correct VID/PID
For now, i only have 4 real disks so, no issue of having an extra drive in there.