This issue occurs if the VMware Tools installation files, located at C:\Program Files\VMware\VMware Tools and C:\ProgramData\VMware\VMware Tools, are corrupted.
Resolution
To resolve this issue, you must reinstall VMware Tools after deleting the C:\Program Files\VMware\VMware Tools and C:\ProgramData\VMware\VMware Tools folders:
Uninstall VMware Tools from the virtual machine.
Reboot the virtual machine.
Take a backup of the C:\Program Files\VMware\VMware Tools and C:\ProgramData\VMware\VMware Tools folders by renaming the folders.