Using Backup Repository 1 scale-out repository extent (unable to meet data placement policy)

That was going to be my first question. 😂

Yes, Sufficient storage there locally. Since it is AWS storage capacity may not issue.

Here is a detailed explanation of the file placement with Veeam which might help with your issue - Backup File Placement - User Guide for VMware vSphere (veeam.com)

What is the current health of your backup repository in your SOBR? Have you had any previous repositories in the SOBR? Just thinking of the obvious things here:

• If the policy was set to data locality and not to create new full backups when the existing extent is offline (though I’d expect a different error this way). What policy have you got set for your SOBR? Data Locality or Performance?
• What backup method have you got configured? Reverse incremental, forward incremental, forever forward incremental?
• As you can’t actually backup directly to S3, it can’t be backing up to S3 but to local instead, then with a copy/move offload later on. So the error must be related to your local repository backups. Can you supply further errors in the logs? How much capacity would a full backup be for your backup job? And what is the free/total capacity of your extent?

Keep in mind backups are not written directly to AWS, but must first land on local storage.

How many local repositories so you have?

How much capacity for each?

How much free space for each one?