vCenter

So I have an old server that is a IBM 3850 with an Intel Xeon E7320 running ESX 4.0 U4

We recently bought a new server an IBM 3690 with an Intel Xeon E7-2850 and installed ESX 4.0 U4

I have a vcenter server running vcenter 5.0

I created a cluster and enabled EVC with the Intel "Merom" Gen. (Xeon Core 2) This appears to apply fine when I go to the summary screens of both hosts, but when I boot a Virtual Machine on the x3690 when I look at the EVC mode: it says Intel "Westmere" Gen. (Xeon 32nm)

Am I doing something incorrectly, or maybe this setup won't work with ESX version 4.0?

Your virtual machine will works based on lower mask of processor, in this case if you check here http://kb.vmware.com/selfservice/microsites/search.do?language=en_US&cmd=displayKC&externalId=1003212 is  Intel® "Westmere" Generation to 28xx Series

if you check virtual machine running on other model of host you probably will see Intel® "Merom"Generation, confirm ?

Yes both hosts show "Merom" on the EVC mode, and a VM machine running on the older box shows "Merom" on the EVC. I can even vmotion from the old box to the new box just fine, but as soon as it gets on the 'new' box it changes the EVC mode to Intel® "Westmere" Generation on the VM and I can't vmotion it back. As well as if I start a VM on the 'new' box it gets an EVC mode of Intel "Westmere" right off.

I do see the 28xx Series on the chart and appears to be supported.

Ahh, you are a genius!

http://kb.vmware.com/selfservice/microsites/search.do?cmd=displayKC&docType=kc&docTypeID=DT_KB_1_1&externalId=2001373

That link of yours just happened to mention

For E7 Series Processors require ESX/ESXi 4.1 Update 1 later. For more information, see Only one way migrations appear to function in an EVC cluster (2001373)

I think that is the problem!

Thanks for your time!