The Windows Server storage objectives in Administering Windows Server Hybrid Core Infrastructure make clear that ReFS cannot be converted in-place from FAT/FAT32/exFAT. The guide notes that the only supported in-place file-system conversion utility is convert.exe for FAT # NTFS, and "there is no tool to convert an existing volume to ReFS without reformatting." The prescribed approach is: "Back up the data, recreate the volume with the ReFS file system, and then restore the data." Because the screenshot shows Disk
2, Volume E: formatted as exFAT, preserving data while moving to ReFS first requires a backup; afterwards you would reformat E: as ReFS and restore. Taking the disk offline or converting the disk to dynamic does not change the file system. Running convert.exe is irrelevant because it only targets FAT to NTFS, not ReFS.
Thus, to meet the requirements (preserve data, minimize effort), the first step is to back up the data on E:, then reformat to ReFS and restore.