Some tips for anyone else trying this out:
1. Make sure that you are using the WDDM 1.1 driver for the VMware SVGA display adapter. There is an older, non-WDDM driver but Windows 7 doesn't support heterogeneous display adapter setups unless all of the adapters are running WDDM 1.1 drivers.
2. I ended up disabling the desktop display on the VMWare adapter. This will prevent you from accessing the console from vSphere, but I use remote desktop for situations when I'm not at the local console. The advantage is that your mouse won't disappear onto the extended virtual screen when you're at the local console.
3. Start off at 2GB of RAM and then work your way up if you're stubborn like me and insist on > 2GB. Make sure you update the memory reservation whenever you increase the amount of configured RAM for the VM.
