We've got almost the exact same scenario.
3 - 2016 servers (RDS) and when VMTools stops, it freezes all sessions and the only way to get it back online is a reboot.
I'm about to open up a ticket with VMWare.
Did you get a fix for the issue from Vmware ?
I am also facing same issue on 2 Windows server 2016 running on ESXi 6.7.
Both the VM's has latest VMTools 11.5
Observed that the servers are throwing below error at the time of DRS migration.
A timeout (30000 milliseconds) was reached while waiting for a transaction response from the VMTools service