The error that I am getting completely makes sense and maybe this is more of a feature request but I can't find a good way around it currently.
Snapshot Error: The requested operation will exceed the VDC's storage quota.
I have an Organization setup based on the allocation model. They have 100GB of allowed storage and the VM is 75GB. They cannot take a snapshot as it will exceed the storage quota. I understand that the VM technically has a second delta disk now and is allocated as 150GB which is why the error happens. Maybe a checkbox to allow over allocation only during snapshots would be nice. Think of the issues when you try to snap a vApp containing a couple 50GB VM's and all the extra storage that would be needed there.
I even tried creating a new Org with allowed thin provisioning, built a new VM, and it still gives the error because of the allocation.