Are you running VC 2.0.2? If so you might want to check that the /tmp/vmware-root directory exists.
Add Host Operation Fails When /tmp/vmware-root Directory is Missing in the ESX Server 3.0.x Host
VirtualCenter Agent fails to upgrade on the host that is missing the /tmp/vmware-root directory. To avoid this issue, ensure the /tmp/vmware-root directory exists in the ESX Server 3.0.x host before you install VirtualCenter 2.0.2 upgrade. See KB 4478241 for complete details.
Whenever something funky goes wrong I tend to restart the mgmt-vwmare service.
At the CLI, try typing "service mgmt-vmware restart" without the quotes.
try to create a directory vmware-root on the host in /tmp
I got this error when I was connected to Virtual Center trying to add a host WHILE I also had a connection to the host in a separate Virtual Infrastructure window open at the same time.
There must be some sort of glitch with Virtual Center 3.5 when trying to add a host when you have connected two sessions to it (one it Virtual Center adding the host, and one connected via virtual infrastructure direct to the host)...