I have a little Proxmox installation running a VM on a 256GB NVMe, which as you can imagine is tight
Not as tight as I was imagining a 256 MB installation to be.
I know nothing about promox, but because it's quiet in here, I imagine cloning the original drive for the original system then expanding it to take over the whole drive is the easier thing to do, it's a fairly standard process and generally nondestructive because you can just put the old drive back in if something breaks.
So, I would probably go e) unless you really want to set everything up again from scratch (which is sometimes nice to do)