In the Unser's Guide(p 69) there are instructions:

Upgrading the Virtual Machine Version;

To upgrade the virtual machine version
1 Select the virtual machine.
2 Make sure the virtual machine is powered off.
3 Click Upgrade Virtual Machine in the Status section of the workspace.
4 Click OK to confirm that you want to upgrade the virtual machine.

But I could not find the "Upgrade Virtual Machine" tab in the Status section.

Let me know how to or where to go.

-------Added on July 28, 2008

I followed your instructions as
Server Host OS: Scinetific Linux 5.1 x86_64bit(RHEL compatible)

1) stop all VMs,
2) stop the vmware software (/etc/init.d/vmware stop),
3) upgrade it (rpm -Uvh <path>/VMware-server-2.0.0-101586.x86_64.rpm)
4) reapply configurator :/usr/bin/vmware-config.pl
5) reboot host os
6) restart all VMs

The VMware server had run successfully. But I encountered the trouble of Remote Console Plug-in
installation into the web browser. I surveyed the related discussion thread and found the solution.
Now the RC1 is running well. Thank you.

Message was edited by: yware

Did you see the Release Note about removing old IE plugin? It does not say what error, if any, you will get but gives a procedure for removing:

When you have an earlier version of the VMware Remote Console add-on installed in Internet Explorer 6 or 7 and you upgrade to RC 1, you must uninstall the earlier add-on before you can install the RC1 version.
Workaround:
If you are using Internet Explorer 7, uninstall the earlier version of the add-on as follows:

1. Open Internet Explorer. Make sure that only one instance of Internet Explorer is open.
2. Select Tools > Manage Add-ons > Enable or Disable Add-ons to display the Manage Add-ons dialog box.
3. From the Show drop-down menu, select Add-ons that have been used by Internet Explorer.
4. Select the VMwareRemoteConsole Class add-on.
5. In the Delete ActiveX section of the dialog box, click Delete.
6. Click OK.
7. Restart Internet Explorer.
8. Return

Good luck, John.

Host and Guest Systems:
Windows XP Pro x64 Edition;
VMware 2.0.0RC1, Build 101586

I must go to my shame closet and hide now.

Well, I was caught unawares and my Server 2.0 Beta 2 installation (on linux) expired. Now I seem to be well and truly hosed. I ran the 2.0RC1 installer over my existing installation and it worked, but I can't start any VMs because it says the license has expired. So I ran the uninstaller, then destroyed all vestiges (/etc/vmware, /usr/lib/vmware, /var/run/vmware, etc, etc). I started from scratch, installed vmware, added my existing VM to the inventory. Still no luck. I get an "unknown error" in the web gui and the vmware.log proclaims that I have an expired version. I've tried creating new VMs, no joy there either.

Is there any way out of this pit? I'm using the serial number I got when I downloaded 2.0RC1. Is there a new one somewhere?

Thanks.

Here's the message in the VM's vmware.log:

vmx| http://msg.License.product.expired This product has expired.
vmx| Be sure that your host machine's date and time are set correctly.
vmx| There is a more recent version available at the VMware Web site: "http://www.vmware.com/info?id=4".

Message was edited by: jitterysquid