Solution: install the SVGAII driver:
- Open Device Manager from Control Panel
- Expand Display Adapters entry
- Right click on VMWare SVGA 3D (WDDM) and click properties
- Click on Uninstall Button
- Check the “Delete the driver software for this device” option
- Click OK
- Your screen may flicker as the driver is removed.
- Close Device Manager and reboot Windows 7.
- Windows will default to the Standard VGA device
- Open Device Manager, expand Display Adapters
- Right Click Standard VGA and select Properties
- Click on Update Driver
- Click on Browse my Computer
- Browse to directory C:Program FilesCommon FilesVMwareDriversvideo
- Click Next
- Confirm driver installation
- Close window and reboot
Thanks to Ryan Gallier!