Had an issue with a backup chain that was syncing files to/from the azure repo, one of which is 6TB.
This large file caused a bunch of errors due to insufficient space in the system %temp% directory (c:\windows\temp\)

The solution is to set a custom temp directory (with sufficient space) on the backup server where the extents are connected (in this case, the backup proxy).

HKEY_LOCAL_MACHINE\SOFTWARE\Veeam\Veeam Backup and Replication\
Name: CustomTempDirPath
Type: REG_SZ
Value: should be system Variable for %Temp% by default.