A bit of encouraging news: I was able to shrink my backup copy on the external HD without any issues. It took a while but it actually finished. I now see that I will either have to invest in a Thunderbolt SSD external drive and house the VM there for good or, spend several hours backing up VM's and reclaiming disk space. I have not yet tested the shrunken VM. I ran out of time. I will test after the holidays.