I have however another problem. If I install 2-3 VMs on the local VMFS it works fine. Any subsequent VMs seem to get disk corruption.

I would run chkdsk on a VM and it would find errors, it will then repair and if I run chkdsk again it will again find errors, the errors are also not the same.

I have tried creating new VMs, restore exising VMs, nothing seem to work part around 2-3 VMs.

3.0.2 works just fine, Even VMs that seem to have corruption work if I leave the VMFS volume intact when downgrading from 3.5 to 3.0.2.

Rolling back to 3.0.2 again.

Initialization of vmkernel failed, status 0xbad0013

I found a solution for this here: http://www.shocknetwork.com/forum/vmware-discussion-f20/esx-vmkernel-doesn-load-0xbad0013-t89.html

and followed the description there, which said that the DIMM memory cards should be installed as 2 per each CPU, and not 4 for one CPU. This solved my issue.

I am posting this here, as the initial issue I saw was Mounting Root Failed and I invested quite some time following the messages in this thread without luck, and with a lot of work.

I hope this will help some more people.