Citrix profile Manager is configured with profile containers with the entire profile contained in the container
Profile container auto-expansion is enabled
Profile container VHD compression is also enabled
The number of logoffs to trigger VHD disk compaction is configured to 1

Under the above configuration, disk auto-expansion does not work when the threshold is reach.

Configured "Number of logoffs to trigger VHD disk compaction" policy setting to 2 or more

Problem Cause

This is in the current design implementation:
Citrix does not suggest to do compaction each time, which is usually a very consuming task for both time and resource (CPU/network). Typically, user may not delete/remove large amount of data each time.