Is that a new VM or is it a VM you were using without any issues in the past?
If it's brand new, I'd suggest removing it and creating it again from scratch preferably using a re-downloaded ISO
If it's a VM you were using previously without problems, can you please upload the logs and a vmss file here? VMware Knowledge Base
The error message is not very helpful for diagnosing the reason on why you are getting it.
Please reply with a vmware.log file attached to your reply (you can find the attach button in the far right bottom of your reply window)
The VM is an existing one that I was updating the guest OS. It looks to be a corruption in the virtual disk file because when I boot the guest into safe mode I don't get the error. I have tried to do a system restore, but that failed miserably. At this point it looks like I need to recreate the VM. Luckily the virtual drive is readable. I have attached the log file.
Sorry for the late reply, this week was a tad crazy, so had to postpone some replies.
I had looked at your log file, but am not really seeing the error in there. Should it contain the CPU Fault from your first post?
Because without that troubleshooting gets more difficult.
Re. a broken virtual disk, well that's possible, but it might be many other reasons. If the data on the disk is corrupt and running a program from a corrupted area which it seems the KB in the other posters hints at then yes, things that might cause a CPU fault might happen.
But then you should be able to troubleshoot the disk with vmware-vdiskmanager and running it against the virtual disk using the -R option. (see Vmware-vdiskmanager - VI-Toolkit )
As you can boot into safe mode, I would try to run: sfc /scannow
and see if that helps diagnosing the problem.
BTW, one thing I notice in your VM configuration is that you have enabled nested virtualisation. Eg. to be able to run a virtual machine within your virtual machine.
Unless that is really required I suggest to turn that off.
You can find it under the virtual CPU configuration:
Neither of those "Virtualize ..." checkboxes should be checked unless you have a specific need for that.
FWIW, they are unchecked by default.