What kind of catalog item and did you assign entitlements to this item?
It is a VM Clone catalog item and yes entitlements were applied.
Would it be possible to see a screenshot of the properties of the blueprint?
I have also faced a similar issue at one of my customer engagements. Please validate these scenarios.
You could check the Appliance at which you have your PostGreSQL Database resides for the Storage. SSH into the appliance and run the command df -k to get the List of Disks with Size.
Check of any disk with size 100% . I found the issue in /storage/db where the PostGreSQL Archival files were piled up and was not cleaned up.
Cleanup older archives. Restart the Appliance. You should be good.
The "System Exception" error is very generic. This could be one of the reasons for that. Worth a Try!!!
Did you check the event logs under Infrastructure > Monitoring > Log ?