MKguy
I went in and set all the advanced properties to 0 like you suggested, reran an sdelete -c e: (just in case) and migrated, with no luck. VMDK is still the same size. Any other thoughts / ideas / suggestions? I really thought you had it with those advanced settings, after reading that article you had linked and seeing that we had each one of thsoe options set to 1.
I can turn the machine off tonight and try the -K switch on vmkfstools to see if i get the same error ...