If you are trying to create a VM with disk drive size larger than 256 you will get this error :
File is larger than the maximum size supported by datastore.
This happens because by default VMware ESX running VMFS3 uses 1M blocksize with a limitation of 256 GB disk size for the guest virtual machine. However it is possible to change the block size.
To changethe block size on a VMFS3 filesystem you can use vmkfstools command from command line ro reformat the parition. The vmkfstools command can be run on ESX server :
#vmkfstools –create vmfs3 –blocksize 2M vmhba1:0:0:2