STOP THE PRESSES!!!
I may have spoken too soon. I found the gig ethernet card to be bad after much testing. Card has been replaced and all tests with new card are coming back 100%, vmware has been uinstalled and i'm starting fresh again. Will post results with vmware 2.0 beta after install tonight.
New Card solved crash and lockout problem but there is still a lot of process power being using for just one little ftp server with zero activity in it. Task MGR on host shows proccess power between 7% and 40% with avg around 22%. Not as efficient as 1.0 but its working:). Boot up time dropped from 20 min down to about 5 which is ok for a singe 2.8 P4 processor. I'll add another Virtual server to it next week and see if it holds.
On a side note I still can't access the console from the host machine. All control of guest FTP server must be through MSTSC and its a little slow. When I MSTSC into guest running on 1.0 host terminal speeds were much faster.
re: can't access the console: there might be something in the release notes that will help you with this (see the quote at the end of this post).
if you get an error dialog when you click to open a console (under the 'Console' tab in Web Access) then adding an entry to your hosts file (on the VMware host, not the guest) might help ;
also, my firefox 2 install doesn't play well with VMware Infrastructure Web Access. I've switched to IE 6 and all seems to be working.
From Server beta 2 Release notes;
On Windows, the VMware Server desktop and Start menu shortcuts use the NetBIOS name in the connection URL. This might cause VI Web Access to fail to connect to VMware Server. VMware Remote Console connections might also fail, with the error Error opening the remote virtual machine machine_name: The host name could not be resolved.
Workaround: Enter the correct host name as the External Name when prompted by the Windows installer. Or, if the URL specified in the shortcut does not work, use the correct host name, IP address, or localhost, as appropriate, in the connection URL. You can also manually enter the short name and the FQDN in the /etc/hosts file.
bug splat, did you try disabling debugging on said VM(s). Under Virtual Machine Configuration, select the Advanced tab and deselect Record runtime