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Thanks for your help!
When first attempting to encrypt the internal drive I received a pop-up warning in Windows 11 that the CD/DVD drive needed to be disconnected. However, this didn't solve my issue.
I was finally able to encrypt via BitLocker by removing my MacBook from all external connections, such as the external monitor, power adapter and Logitech joystick, and repeatedly shutting down and restarting the Virtual Machine while trying again until I finally got past the first step. Several restarts were required but my internal hard drive is now encrypted.
The Logitech 3D Extreme joystick connected to my USB port, however, has never been recognised in the virtual machine, despite plugging it into all available USB connectors as well as through the external monitor. Not sure why, but I noted that under Hardware Devices there is no listing for the joystick controller, which is recognised in my Parallels Desktop VM and installed automatically by Windows after the first plug-in.