I switched the _plugin_file_dsn_type flag to false in the manager.xml, but now instead of the DSN adding as a file dsn, it's not adding it anywhere. The DSN looks like it has been set up through the user's vds, but it's not really there.
The source of the problem is that the size of the name is limited for system DSNs.
If the size of the name of the new DSN was too long, the creation will fail but the wizard will finish successfully and the GUI will display incorrect information.
To reduce the initial size of the DSN, change the VDS Unique ID from Domain to VDS name.
This will reduce the prefix as usually the VDS name is shorter then the domain.
In order to use the VDS name as the ID
Both changes: the DSN type and the DSN prefix change is a decision that should be taken by the ISP after the SD is first installed (this is the best practice) .