Even though the datastore exists and can be referenced at destination ESXi host, the workingDir parameter was removed during restore with the following message.
2022/12/02 11:48:46 Removing workingDir parameter because it points to a non-existent datastore /vmfs/volumes/63652fbd-aed4fef5-8da8-48210b3d7365
After checking with support(Case # 05738353), we were told that the Veeam specification is that if the root directory of the datastore is specified, it is removed even if it exists.
Please note that there may be few cases where the root directory is specified.