Yep, did that too (uninstalled VMware Tools). No luck. I also uninstalled every non-Microsoft driver I could find, and then removed from the VM every non-essential device, except for the USB hub, video card and CD/HD drives.

This is not a custom ISO, it's the official release from Microsoft. I also used previous versions too. In all, I tried the official ISO files for W10 versions 1909 (Nov-2019), 20H2 (Apr-201) and 21H1 (current).

At this point I don't think it's anything related to W7 itself, because the boot process doesn't even get to the point where it analyzes the previous Windows installation.  It fails right away, in seconds.  So the problem must be with the VMDK file headers, there's something there that the Windows installer does not like.  If I replace the W7 VMDK file with a newly created blank one, the ISO boots just fine and the main window appears.

The W7 VMDK file is old, created from an actual drive using the Converter tool back when Workstation was in version 11. Is there a tool that could check this file for errors or even copy the contents (but not the headers) to another fresh/new VMDK file?