Never mind - its got fixed with an SR - the answer for anyone interested is:
I had to log an SR with VMware, and they have confirmed this is a bug in the installer caused by incorrect lookup of Update Rollup 1 in the registry. Reg hack is available but will be fixed in VC 2.02.
I also handed over this issue to one of the escalation engineers at VMware in Ireland.
Here a short summary:
************ Problem ***********
Update from VC 2.0.0 to VC 2.0.1 not possible.
Error message that Update Rollup 1 is not installed.
************ Root Cause (if known) ***********
Wrong registry check of installer.
************ Solution ***********
Replace NTDLL.DLL by KERNEL32.DLL:
HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Updates\Windows 2000\SP5\Update Rollup 1\Filelist\0]
"FileName"="NTDLL.DLL"
"Version"="5.0.2195.7006"
"BuildDate"="Thu Jan 13 10:09:36 2005"
"BuildCheckSum"="77ecb"
"Location"="C:\\WINNT
system32"
