This is an ongoing issue that bothers me from time to time since our VMware Infrastructure in production. There could be quiet a few reasons cause this problem. Everytime it spikes, the whole machine is rendered useless. I have done:
1> Applied ESX3.5 Update 1 and VirtualCenter 2.5 Update 1 (This CPU problem has been fixed for a while, however, it came back recently.)
2> I am holding off the April-30-2008 patch because people are saying it brought back the CPU problem which Update 1 had fixed.
3> I switch DRS from Partially Automatic to Manually. So there should not be any Vmotion happened until next patch for this CPU issue. I have observed that Vmotion could be one reason to trigger this High CPU issue.
4> However, yesterday, it happened right at 5PM (without any Vmotion). So I guess it has to be something scheduled to run at 5PM. Eventually I realized MS System Center Essential Agent was installed on this VM. uhha! It was a left-over. Uninstalled it and hopefully that was it.
This issue has been driving me NUTS!
We are having the same problem here running similar set up ESX3.5 Update1 and VC 2.5 update1. It seems to be related to rdp sessions. Not always but occationally just after one RDPs to a VM CPU goes to 100% and disk utilization drops to zero. We are also running "MS System Center Essential Agent". Did that solve your problem?