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I contacted some VMware contacts and the best answer I got was that I should try PowerCLI 6.5 instead of 10.x
I did that and was able to make a new-org correctly without error. I then upgraded back to 10.1 and was still able to run new-org correctly. I'm not sure if something was left behind from 6.5, but at least I'm able to do some work with it now.