This issue occurs when you have customized the Windows folder containing your virtual machine files. When you customize a folder, Windows changes the folder's state to read-only, which prevents Workstation from restoring a snapshot. This issue persists even when you remove the customization.
If the attrib command does not work by itself, see Microsoft Knowledge Base article 256614. This article instructs you to add a DWORD value to the key: HKEY_LOCAL_MACHINE\Software\Microsoft\Windows\Current Version\Explorer .
After you edit the key, you can remove the read-only attribute with the attrib command. The Restore Snapshot command should then work correctly and without error.