The closest I got to it working was with an nVidia GeForce 7200GS but that also gave the "Driver stuck in an infinite loop" BSOD with nv4_disp.dll.  Tried it both on an xp 32bit and win7 x64 vm but same regardless.

The driver used had an impact.  I tried various ForceWare versions, but the only that was closest to working was the 181.22 version - this installed, card was listed in device manager with "this device is working properly" status, and I could see it in the display control panel, but as soon as I enabled the monitor connected to it to extend my desktop onto it, the VM hangs.  I also tried disabling the vmware svga virtual adapter and this made no difference.

I also tried an ATI FireGL V3100 and it gave various BSODs too.  I have just bought an ATI Radeon HD3450 on eBay and am also borrowing a friends ATI Radeon 2400HD so im really hoping I find some success with one of these.  I will report back and let you know.

BAM.