I have a machine running Windows 7 Professional SP1 directly on hardware. I use this machine for all developing stuff. As this includes web– as well as WP7–development I have some virtual linux-hosts running inside VMWareServer2 for my webdevelopment.
As soon as I start the WindowsPhone emulator (natively, not inside any of the VMWare client-instances) all the VMWare machines stop working and remain unstartable upon restart of my Windows 7 machine.
It seems, that the launch of WindowsPhone emulator (which is a virtual machine itself) crashes VMWareServer and keeps it locked down even after the WindowsPhone emulator was closed.
How can I prevent the WindowsPhone emulator from crashing VMWareServer?
Have a look at this blog post, he seems to have the same problems as you and found a work around... Although not an idea one he had to disable hardware assisted emulation in VMWareServer.
VMWare themselves just say to uninstall the competitors emulator... as if that was an option
http://pcbl.de/2011/06/13/round-1-fight-windows-phone-7-emulator-x-vmware/