thank you for the time you invest in reading and trying to solve the problem.

In my case it is not a Parallels virtual machine.

I have VMware Fusion 13, Windows 11 Pro ARM version installed.
I later installed Tech Preview 2023. Since then re-encrypt has been a problem. I thought with version 13.5 it was solved but I am still here

As info: VMware Fusion 13.5.0 on macOS Sonoma 14.0, NVMe 120 GB split into multiple files, encrypted only the files needed to support a TPM ...