I think the Windows 10 Professional in your host laptop has Hyper-V enabled and VMware Workstation 16.x is thus using the User Level Monitor (ULM) instead of the root VMM.

https://blogs.vmware.com/workstation/2020/05/vmware-workstation-now-supports-hyper-v-mode.html

You should turn off the Hyper-V feature at the host OS and the root VMM will be used and nested virtualisation for Workstation Pro should work like it has before even version 16.