Azure Site Replication Initial replication of VMware VM failed at 0%

I'm testing ASR on a VMware environment and trying to replicate the Win 2022 server VM to the ASR vault. I have deployed an ASR appliance on the environment and it's connected to the Azure recovery vault.

Windows Firewall and Defender are disabled in the appliance VM and source VM. Both VMs have direct access to the internet. When I enable replication for the VM it will start the initial replication but the sync will never pass 0%.

From what I can see the source VM is talking with the appliance and the appliance communicates with Azure but for some reason, data is not syncing into Azure.

Can someone please help me to resolve this issue?

CXPS.err log on ASR Appliance VM:

024-Jun-04 12:21:47	ERROR	[at C:\__w\1\s\host\cxpslib\requesthandler.cpp:RequestHandler::parsePutFileParams:835]   (sid: 28334.1eb57e6b6c0) local ip: 192.168.80.111, local port: 9443, remote ip: 192.168.80.112, remote port: 61395 :  error: [at C:\__w\1\s\host\cxpslib\requesthandler.cpp:RequestHandler::VerifyDirAccess:2757]   BiosId 6daf2142-498b-b0c1-210b-a38f3ea2d6e2 is not found in the PSSettings. Access Denied : E:/PSReqDefDir/bcd0eb8a-6b3f-436a-a84b-3f7c338761fe.mon
2024-Jun-04 12:21:47	ERROR	[caught at C:\__w\1\s\host\cxpslib\requesthandler.cpp:RequestHandler::process:161]    (sid: 28335.1eb57e69af0) local ip: 192.168.80.111, local port: 9443, remote ip: 192.168.80.112, remote port: 61398 : [at C:\__w\1\s\host\cxpslib\requesthandler.cpp:RequestHandler::deleteFile:1350]   bcd0eb8a-6b3f-436a-a84b-3f7c338761fe.mon -  - 1 failed: [at C:\__w\1\s\host\cxpslib\requesthandler.cpp:RequestHandler::VerifyDirAccess:2757]   BiosId 6daf2142-498b-b0c1-210b-a38f3ea2d6e2 is not found in the PSSettings. Access Denied : E:/PSReqDefDir/bcd0eb8a-6b3f-436a-a84b-3f7c338761fe.mon
2024-Jun-04 12:21:54	ERROR	[caught at C:\__w\1\s\host\cxpslib\requesthandler.cpp:RequestHandler::process:161]    (sid: 28336.1eb57e69560) local ip: 192.168.80.111, local port: 9443, remote ip: 192.168.80.112, remote port: 61404 : [at C:\__w\1\s\host\cxpslib\requesthandler.cpp:RequestHandler::listFile:1725]   listFileGlob failed: [at C:\__w\1\s\host\cxpslib\requesthandler.cpp:RequestHandler::VerifyDirAccess:2757]   BiosId 6daf2142-498b-b0c1-210b-a38f3ea2d6e2 is not found in the PSSettings. Access Denied : E:/PSTelemetry/bcd0eb8a-6b3f-436a-a84b-3f7c338761fe/logs/*.json
2024-Jun-04 12:21:54	ERROR	[caught at C:\__w\1\s\host\cxpslib\requesthandler.cpp:RequestHandler::process:161]    (sid: 28337.1eb57e66e70) local ip: 192.168.80.111, local port: 9443, remote ip: 192.168.80.112, remote port: 61407 : [at C:\__w\1\s\host\cxpslib\requesthandler.cpp:RequestHandler::listFile:1725]   listFileGlob failed: [at C:\__w\1\s\host\cxpslib\requesthandler.cpp:RequestHandler::VerifyDirAccess:2757]   BiosId 6daf2142-498b-b0c1-210b-a38f3ea2d6e2 is not found in the PSSettings. Access Denied : E:/PSTelemetry/bcd0eb8a-6b3f-436a-a84b-3f7c338761fe/logs/*.json
2024-Jun-04 12:21:54	ERROR	[caught at C:\__w\1\s\host\cxpslib\requesthandler.cpp:RequestHandler::process:161]    (sid: 28338.1eb57e67400) local ip: 192.168.80.111, local port: 9443, remote ip: 192.168.80.112, remote port: 61410 : [at C:\__w\1\s\host\cxpslib\requesthandler.cpp:RequestHandler::listFile:1725]   listFileGlob failed: [at C:\__w\1\s\host\cxpslib\requesthandler.cpp:RequestHandler::VerifyDirAccess:2757]   BiosId 6daf2142-498b-b0c1-210b-a38f3ea2d6e2 is not found in the PSSettings. Access Denied : E:/PSTelemetry/bcd0eb8a-6b3f-436a-a84b-3f7c338761fe/telemetry/*.json
2024-Jun-04 12:21:54	ERROR	[caught at C:\__w\1\s\host\cxpslib\requesthandler.cpp:RequestHandler::process:161]    (sid: 28339.1eb57e6bc50) local ip: 192.168.80.111, local port: 9443, remote ip: 192.168.80.112, remote port: 61413 : [at C:\__w\1\s\host\cxpslib\requesthandler.cpp:RequestHandler::listFile:1725]   listFileGlob failed: [at C:\__w\1\s\host\cxpslib\requesthandler.cpp:RequestHandler::VerifyDirAccess:2757]   BiosId 6daf2142-498b-b0c1-210b-a38f3ea2d6e2 is not found in the PSSettings. Access Denied : E:/PSTelemetry/bcd0eb8a-6b3f-436a-a84b-3f7c338761fe/telemetry/*.json
2024-Jun-04 12:21:55	ERROR	[caught at C:\__w\1\s\host\cxpslib\requesthandler.cpp:RequestHandler::process:161]    (sid: 28340.1eb57e68fd0) local ip: 192.168.80.111, local port: 9443, remote ip: 192.168.80.112, remote port: 61416 : [at C:\__w\1\s\host\cxpslib\requesthandler.cpp:RequestHandler::listFile:1725]   listFileGlob failed: [at C:\__w\1\s\host\cxpslib\requesthandler.cpp:RequestHandler::VerifyDirAccess:2757]   BiosId 6daf2142-498b-b0c1-210b-a38f3ea2d6e2 is not found in the PSSettings. Access Denied : E:/PSTelemetry/bcd0eb8a-6b3f-436a-a84b-3f7c338761fe/logs/*.json
2024-Jun-04 12:21:55	ERROR	[caught at C:\__w\1\s\host\cxpslib\requesthandler.cpp:RequestHandler::process:161]    (sid: 28341.1eb57e6d290) local ip: 192.168.80.111, local port: 9443, remote ip: 192.168.80.112, remote port: 61419 : [at C:\__w\1\s\host\cxpslib\requesthandler.cpp:RequestHandler::listFile:1725]   listFileGlob failed: [at C:\__w\1\s\host\cxpslib\requesthandler.cpp:RequestHandler::VerifyDirAccess:2757]   BiosId 6daf2142-498b-b0c1-210b-a38f3ea2d6e2 is not found in the PSSettings. Access Denied : E:/PSTelemetry/bcd0eb8a-6b3f-436a-a84b-3f7c338761fe/logs/*.json

Error message on Azure:

Event Name
Replication health changed to Critical.
Event Type
VmHealth
Source
Mobility service agent
Associated servers
Win Server AZ Test
Time
04/06/2024, 2:33:19 pm
Error ID
327506
Error Message
Synchronization progress is slow for the disk(s) '\\.\PHYSICALDRIVE0' of the source machine 'Win Server AZ Test'.
Possible causes
 1) Disk reads on the source machine are slow 2) Review active health issues on Process server.
Recommendation
 1) Review the achievable throughput on the disk and upgrade if required. 2) Go to Process server connected to this source machine and follow the recommendation on any active health issue.