Error when adding data to dataset with Renku CLI

[bethcg]

Describe the bug
When adding data to a dataset created on a local filesystem folder, the following error popped up: "Error: External storage is not configured, but this action is trying to use it.". After following commands:

renku dataset create dataset-name --storage file:///data/localFolder/
renku dataset add dataset-name file:///data/localFolder/ -- move

The error mentioned that this person was trying to use external storage and was not configured. It is weird that such an error is raised if only local files are being used,

To Reproduce
Installed Renku 2.4.1rc1 and Rclone in a virtual machine.
Steps to reproduce the behavior:

1. Created a new Renku minimal project with Python
2. Created dataset as indicated above
3. Added data as shown above.
4. Error:
   Error: External storage is not configured, but this action is trying to use it.

Expected behavior
Adding data to dataset as expected, without raising any error.

Screenshots and/or execution output
NA

Run environment (please complete the following information):

• renku-python version: Renku 2.4.1rc1
• Python version: default in Renku Project Python minimal
• local terminal OR renkulab interactive environment? Local terminal (Virtual Machine)
• if renkulab, specify RStudio / Jupyterlab / Other & browser [e.g. chrome, safari]

Additional context
Initial indications from the team are related to: "This is an LFS error. You should use renku clone command to clone a repository, because this will install git LFS and required git hooks for renku. You can also run git lfs install --local to install git LFS for the project (this instruction should be printed when that error is displayed)."
However, this person is not cloning any repository (starting from scratch), and they do not plan to use git LFS for the project. The project will handle up to 1 TB of data.