I installed Windows 98 SE on a 6 GB virtual disk. The OS installed and runs correctly, but I tried several times to install the VMWare Tools, and can't.
First I was told having the install CD in the drive might affect the installation of the tools, so I ejected it. I ran the tool install option, and it opened up the CD Player in Win98. It asked for an audio CD. Then it sat there.
I waited and waited, while the option in the toolbar said Cancel VMWare Tools installation, so I did and rebooted the VM, and the same thing happened - just the CD Player app opened in Windows, and nothing else happened.