can you create a folder under the virtual machines & templates view, drag the VM in question into that folder and give permissions on that folder?
Do you only want them to see the one VM only?
Delegate or Assign? To assign the permission, you assign the permission ONLY on the object you desire. You do NOT assign lesser permissions above that object. It sounds like you have denied this user access to items above the VM and trying to assign greater perms to the VM itself. This does not work. The 'least' permissions win.
So you have the following:
DC .... Cluster ......... Resource Pool ..............VM <= ASSIGN PERM HERE
In general do not assign perms anywhere else. Ideally you would ONLY assign the perms ona VM under the VIrtual Machine and Templates View NOT the Host and CLusters VIew
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This is patently wrong. If you only assign permission to the object that you are wanting to grant access, the result will be that when the user logs into vCenter Web Access, they will not see any inventory.