I have the exact same experience. I have also been wrestling with this since last year, Sep/2022 sounds about right.
I have been experimenting with Win 10 Pro 32/64 hosts and installing Win 10 Pro/32 as guest. Experiments all start with clean installs (host & guest), no configurations of any kind, no programs, nothing. The guest reboot (after updates) goes through the exact same convulsions as you described. I then tried an all new installation, paused the updates immediately and updated manually. The results are definitive it is KB5023696 that is causing BSOD.
I see that KB5023696 goes all the way back to Win 10 20H2. I didn't do any investigating back then but dimes to doughnuts this is the culprit. MS did something in KB5023696 way back then and VMware has not addressed it.
The iso's I use are all downloaded via M$ website, created with M$ media tool thing.
Look at my post of Apr 06, 2023 "BSOD Windows 10 KB5023696 - SYSTEM THREAD EXCEPTION NOT HANDLED" for more details. Perhaps you can see someting.
