Just found out that after applying update 2 on my ESXi 4.1 hosts VMotion is disabled.
Apparently it is a "known issue" according to the release notes for update 2.
vMotion and Storage vMotion
- vMotion is disabled after a reboot of ESXi 4.1 host
If you enable vMotion on an ESXi host and reboot the ESXi host, vMotion is no longer enabled after the reboot process is completed.
Workaround: To resolve the issue, reinstall the latest version of ESXi image provided by your system vendor.
I am thinking this could cause serious problems for anyone using Distributed Power Management.
I do not think the workaround is a good solution. We need a fix VMware!