Thanks Wila! You were right in drawing the attention to the hard disk. However, it is not that simple - no surprise there, because if it would have been simple, the problem would have been solved, perhaps before logging it in here.

Summary: I now know, what to do, to make it work in Ubuntu 20.04.1. The way is to avoid older technology hard disks and USB-2 interface. As such, these should be avoided in heavy VMware use anyway, but they were expected to work in simple testing. I haven't tested every possible combination, because of the time required. A failing test, often means a broken VM (because any realistic way to stop the test involves "kill process").

Longer reply with some results:

There is nothing wrong in the workstation as such. VMware is not really CPU intensive, but it is disk speed intensive. So, with an older CPU you can achieve good performance, if you just have fast disks. Only using the VM OS for something CPU intensive, requires a fast CPU - VMware itself as a virtualization system, does not need that. To get conflicting results to the above, means bad testing, where you test old workstations with slow disks - you should separate the matters, which really make good or bad performance for VMware.

However, there is something wrong in the way how newer versions of Linux handle old hard disks, as VMware has implemented it. I say Linux, meaning that Debian-based Ubuntu and Fedora 33, both have this problem. I have not verified how it is with Windows 10, but it appears to be OK, since no problems have arisen. This problem is also with USB-2 interface, no matter if the disk is SSD, it is still not possible to use VMware through that interface.

To make the above a bit clearer, let me say what is working OK:

- the hard disk itself does not give any indication of being broken. The basic SMART-test does not give a problem. (This isn't, of course, 100% test, but read forward)

- Ubuntu 16.04.1 does NOT have a problem with the said hard disk in VM (Win7). SAME VM.

- Ubuntu 20.04.1 does NOT have a problem with a new hard disk (6 TB to give an indication of its technology and age). Same VM and also a brand new Win 10 VM, created in that environment (= this 6 TB disk), no problems arise.

- Win7 and Win10 VMs do not seam to make a difference, although virtualization setups in VM, are by default different

So, there is something wrong in the way how VMware handles hard disks in new versions of Ubuntu/Fedora. The problem arises with older hard disks, not with a new technology, 6 TB, hard disk. Whether the underlaying problem is with Linux (kernel), Linux distro or VMware is hard to say, but it has definitely slipped in Certification (or whatever the release tests are called for VMware) of VMware. Since this was already present in Ubuntu version 18.04.1, with an older kernel, this slip has been a continuous one.

There are of course left many question marks for the operability, but I will skip them, because they are not relevant to me, at this point. Things like: USB-3 interface SSD/Nvme H.2 disks, internal SSD-disks, cross-checking with Windows 10 Host with the same HDD, a more exact HDD study, using newer Host hardware, using different SATA-interfaces of the motherboard.

But anyway, thanks a lot for the help!