BKG

Hi All, after playing with settings for a bit it looks like it worked and now everything is back to normal. Not sure if I was making the mistake from the beginning and the below steps are irrelevant as I was rapidly making a lot of changes and at some point noticed the VM was showing 'guest services are not installed' message. But still here are the steps:
downloaded latest drivers VirtIo.iso added the iso to the VM to make it appear as the CD/DVD drive in windows VM started the VM(Win11) with only one drive which is the image in cache inside VM navigated to the CD/DVD and installed guest-services made sure they run in 'automatic' in Windows services inside the VM restarted VM 'guest services are not installed' message stays for a short while and then disappears force-stopped VM and added the 2nd Vdisk location - manual>/sdf(in my case the pass through HDD is sdf) type - SATA started the VM inside VM went to windows>tools>storage  management and initialized the drive and then formatted it. This time it allowed me to do everything without freezing the VM. Not sure which one of the steps fixed my issue, but tend to think its the setting for 2nd vdisk location which needs to be simply /sdf
 
Hope it helps someone. Cheers!