"even a full duplex link can handle this easily."
Still bad design plan and simple…
No hairpin is not a "NAT" term.. Yes you can hairpin with NAT, ie NAT "reflection". The term hairpin means in and out same interface.. And it should be avoided if possible. When you have multiple vlans on the same physical interface and vlan A talks to vlan B this is a hairpin, and not best for performance. If possible if you have vlans that send a lot of traffic to each other, these vlans should be on different physical interfaces at the device making the routing decision.
You say your windows machine is fast, the way you drew it - looks to be coming in different path than the interface you have your vti on? Is that the case? Again you state this is hosted on VM, what interface in vm are physical in the drawing what are virtual?
This is esxi, where is your vmkern? Same interface?