In what folder were you looking for the config file? 

At first I was looking in the VMWare program directory and the only file with vmx anywhere was a .exe file.

Where I found was under the following path C:\Users\*****\Documents\Virtual Machines\(whatever you have named your virtual machine)

This is where the .vmx file with the editable line - usb.restrictions.defaultAllow = "FALSE" - was located

My virtual machine is named Windows 8.x x64 (yes, very original) so the file is named - Windows 8.x x64.vmx