The specified storage is unusbale as it is a system volume, has existing data, is in an unhealthy state or formatted incorrectly. (ID:40005).
You would face such an error, when you try to add volumes in System Center 2016 Data Protection Manager. That error was unsolvable, and there was no workaround that would help you, until Microsoft released Rollup Update 2 for SCDPM 2016. This update would solve this issue, which you can download from here.