Problem making disk image from folder on external HD even though works ok on internal macOS SSD?

Hello, I'm trying to make a disk image from a folder on an external hard disk formatted as 'Mac OS Extended (Journaled)' and get an error message soon after trying this with Disk Utility. The error message is "Operation failed: Operation not permitted". So I assume some privilege of some sort is the problem? The external HD has "Ignore ownership on this volume". If I move the folder to my user directory, then Disk Utility works ok. Any suggestions appreciated. Using macOS 12.4 on MacPro6,1