When I tried to install the Windows Home Server 2008 (Windows Server 2003 based) on my VMware workstation 7.1 recently, I had several issues. So, here is a memo to fix those:
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Use IDE I/F when creating a virtual disk for the primary disk.
Also it need to be at least 80GB.
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After the first step installation from DVD, it is going to reboot and resuming the installation from a disk.
However, at that point, it requires VMware's SCSI disk driver, even though the DVD is using IDE I/F.
So, make sure to attach a driver floppy image "vmscsi-1.2.0.4.flp", and hit "F6" to load that driver.
Reference:
Using the VMware SCSI Disk Driver for Windows Guest Operating Systems
http://kb.vmware.com/selfservice/microsites/search.do?language=en_US&cmd=displayKC&externalId=1006956
SCSI Disk Drivers for VMware Server, Workstation or ACE
http://downloads.vmware.com/d/details/scsi_dt_server_wkst_ace/dHdiQGh3YiVq