It suppose to grow and does for my installation. Do you know what version of the Data Ontap SVE version you are running? When I called to confirm the auto grow feature the SV tech mentioned that sometimes it does not grow as it is suppose to. If I find anything out I will post on here.
I have applied S10 (latest version). What appears to be happening, is when I got the S550 I messed up the configuration and restored the unit to factory defaults.
I think the CIFS/NFS (/vol/exports and /vol/shares) defaulted to a limit. I chequed with a few more units out in the field and they have higher default limits for the CIFS and NFS folders. After resetting to factory defaults I think the unit did not "see" all the drives and thus the default.
The other S550 units in have higher limits but they do not equal the size of the entire usable space.
That's my best guess so far.
PS. I am baseing my observations on the results of a df -h on in a CLI session.