Hi,
There this sounds like a regression from a small change in behavior of the zstd tool in PVE 7.0. It has been fixed since a while, from the screenshot I can see that you have outdated package versions.
Ensure you have Proxmox VE repositories that you can access set up (Node -> Repositories) and then update the node to the latest versions, the web-interface should show at least 7.0-11
for the version (at time of writing).