Okay I figured out the issue above. Of course it was user error 🙄. I have just setup a physical xpenology and reused files. Made the modifications to grub like I was supposed to but still, my bad.
So onto a new issue. I have a disk which is 1.8 TB dedicated to xpenology. After copying around 20 gigs the disk shows full. All 1.8 TB used. I don't even know where to start with this issue. The VM locks up and I must power it off and restore a snapshot to get it back up and running. It happened once so I rebuilt and now it is happening again.
UPDATE: It doesn;t matter what file operation I do, the result is the same. I restored a snapshot and setup storage again. After copying one file which was 1.13 GB the VM locks up and shows the drive as full. Even ESXI shows the drive as full.