But if I am right in saying, if use a VLAN to seperate traffic I no longer have failover for the management or VMotion network but if I use Production and Management on same vSwitch I could use the same VLAN for both and still have failover?

You can have failover, you have only to do tagging at portgroup level.

The 2 NIC are on "trunk" port of the "real" switch.

Andre