This issue may occur if a compatible disk controller driver is not detected by the Windows installer.
Resolution
To resolve this issue, check the SCSI controller type that you have selected. For example, an LSI Logic SAS generates an error, whereas an LSI Logic Parallel choice works properly.
After reconfiguring the SCSI controller, power on the virtual machine and then retry the installation.
Notes:
If the guest operating system is not Windows 2008, use the New Virtual Machine wizard to create the virtual machine. The wizard displays the controller type recommended by VMware for the guest operating system.
This error may also occur due to a corrupted Windows 2008 R2 ISO. VMware recommends you to use a java based download manager to download the ISO.