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Cannot install VMWare Tools in Ubuntu VM -- mouse gets locked

I am moving from Parallels to VMWare Fusion and I am stuck at the moment. I have created a Linux Ubuntu VM and any time I click within it, mouse gets locked and I see message saying: "To release your mouse press..."

I understand that this can be fixed by installing VMWare Tools. I click on it and a disk image gets mounted. Now, what should I do? I cannot untar the installation archive, I cannot copy it, I cannot check the path to my installation path -- since I cannot click on anything.

Frankly, I do not understand: if Linux is not working without the Tools installed, why not install it by default?

Any help would be greatly appreciated!

EDIT: I have finally managed to install VMWare Tools, but I am still not able to use mouse. I press Control+Command to release my mouse. I see the cursor. But as soon as I click on it, it gets locked and disappears again. Totally not usable. Any ideas?

Thank you. 

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