The Datastore is checked on the Datastore Configuration as a provider.
Still when "unlisted datastore can be used for all purposes"
The ZVM does not allow the disks to be used for pre-seed (volume are not listed on the ZVM)




   The Datastore is not added to the ZVM on the Datastore "Provider Configuration window" correctly and it is not configured to be used by the ZVM for pre-seed disks.    




From the ZVM on the Site settings:
Accessed from Site Settings > Cloud Settings tab > Datastore Configuration area

In the Provider vDCs area (top), click Add.
And Configure Provider > "Provider Datastore" you will specifically need to select the "pre-seed" possibility to that datastore from the available options: [mirror], [journal] and [pre-seed].