John, I believe your issue may be that the IBM VTS is installed as SMS managed tape. Have you added the VTS to SMS, if not you may need to. If you do have it defined in SMS, verify the tape datasets are getting assigned the correct storage group. If they are falling into a storage group for disk, that would drive this error. The DFSMS OAM Planning, Installation and Storage Administration guide for tape libraries (SC23-6867-01) would be the best manual to refer to if you have not set the VTS up in SMS.
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