Sound does work with Ubuntu 8.10 hosts and WinXP guests, but I have seen problems where the host has /dev/dspX (X is a number) and VMwre is looking for /dev/dsp; or the VMware is looking for /dev/dspX and the host has /dev/dsp. Similar to the same problem reported regarding /dev/rtc(X).

Please note that you'll still have a problem in that once you have sound working on the guest, if the host starts to use the sound device, the guest will lose it. Sound on linux is one area where VMware is still seriously lagging, being tied to an archaic sound architecture, and not using modern Linux audio, which would allow the audio device to be shared across the host and multiple guests.