A workaround for this issue is to perform the following tasks:
Install Windows XP.
Install VMware Tools on Windows XP.
Install Windows XP Embedded Studio.
Import the vmx_svga driver into Component Designer of Microsoft Windows Embedded Studio. The vmx_svga driver can be found from the root directory of VMware Tools. (for example, C:\Program Files\VMware\VMware Tools\Drivers\video\).
Save the imported driver as a .sid file: vmx_svga.sid.
Import vmx_svga.sid into Component Database.
Build Windows XP Embedded with the vmx_svga driver.
Boot and log into Windows XP Embedded.
Check the driver status of display adapter. VMware SVGA driver should work properly.
Install VMware Tools on Windows XP Embedded. No warning messages are issued.