Generally this option will grey out if you have already initiated this and Tools image is mounted to guest VM. Go to VM settings and check if tools image is mounted. You might have initiated it previously.
when you see this option grayed out that's means sometimes that you don't have a virtual Optique drive in your Vmware guest , so try to make one from menu VM->settings->ADD .
I had a similar problem when installing a 64-bit Debian 9.x VM from a VirtualBox .ova file on VMware Workstation 14 Pro.
The problem was that the guest OS was set to "other" in Settings->Options->General
If I set the OS to Debian 9.x, VMware complained about the BusLogic SCSI driver being incompatible and would not launch the VM.
Finally following another post, I set the OS type to ubuntu (even though it's Debian). Then it all worked; I was able to mount the vmware tools ISO and the "Install VMware Tools" menu option was available. Then in the VM it just appeared as if a CD had been put in the drive.
You can try to address following path of ISO files on the ESXi host :
And then install the VMware Tools on guest OS again.
Okay so on mac I was trying to create a win 7 vm machine using vmware fusion on MacOS obviously.
I had the same issue and what I did was I disabled cd/dvd and restarted the machine, this re-enabled "install vmware tools".
How to disable
Open the specific vm screen > go into the virtual machine drop down > settings > then under "Removable Devices" click on CD/DVD (SATA) > Uncheck "Connect CD/DVD drive".
This should re-enable the "install vmware tools". Thanks
Sometimes it happens for no reason. I faced with it and my approach is that
Step 1: Shut down the VM.
Step 2: Remove the CD/DVD from the Virtual Machine.
Step 3: Start the VM
Step 4: After VM launched, go to Settings --> then Re-Add the CD/DVD. Right after that, a VM Installation tool pop-up will appear.