Requirments:
Microsoft Windows Vista Enterprise in an ISO file
VMware Server 1.0
Desktop PC with 2GB of RAM
Creating the Virtual Machine:
Before installation, you must create a virtual machine inside VMware to house the Vista system. To do this, I went to File->New->Virtual Machine. I clicked Next and took the default of Typical.
I found that VMware does now have an option for Vista and Vista x64 as
valid "machine types". I selected Vista from the drop down of machine
type, like this:

From here, I clicked Next, typed a name for my new Vista Test machine (called "Vista Test", how original). I clicked Next and Next again to select bridging as my network connection.
Next, I took the default to allocate
16GB of disk space for the guest OS but chose not to allocate it now.
This may cause some performance issues in the long run but is best for
my disk space.
One more reason that this is a good time
to use VMware with Vista is that the VMware Tools are available for the
Vista operating system. Make sure that you load these VMware tools
after you get Vista up and running.

Then, I clicked Finish.
Booting the Vista Install CD:
To
boot the ISO CD, I double clicked the CDROM drive and added the Vista
ISO file as the virtual CDROM drive. Of course, you could also boot a
physical Vista installation CDROM and map VMware to the CD Drive. In my
case, I made sure that my virtual CD would be connected at startup, like
this:

Next, I powered on the virtual machine, which was configured like this:

Once booted from the Vista install CD, you can choose your language, click Next, then, clickInstall Now.

Vista/VMware CD Driver Issue:
Immediately after clicking Install Now, I received this error:

I'm not saying that everyone will receive it but I did. It is discussed in the VMware forum at this link: http://www.vmware.com/community/thread.jspa?threadID=62141.
Somehow, what this error is saying is that Vista recognized the CDROM
drive when it booted from it and began the install but, at this point,
it can't seem to recognize it any longer. I don't understand the cause
for this but I have the solution. I read that other users have
complained of this same error when using VMware ESX Server.
To
get around this, you need to provide the drivers for the CDROM drive. I
did this using a virtual floppy file (FLP). Here is a link to download
my virtual floppy file:
Mitsumi CD-Rom Drivers:
To mount the floppy, go to the VM menu
on the toolbar and click on Settings. Then click the floppy drive.
Select the Virtual Floppy and enter the path to the FLP file. Make sure
it isConnected and click OK.

Back in Vista, browse to find the drivers on the A: drive and click OK.

Next, you will see that you are installing the new driver, like this:

Click Next. From this point on, the installation of Vista will be as normal. (You can follow our article Install Windows Vista if you need help)
When you are done with the complete process, you should see your Vista screen inside VMware Server like this:

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