In order to be able to make full use of your VMware implementation, whether it’s a vSphere install Workstation or Fusion, you really need to install VMware Tools inside each virtual machine that you create.  At times, you may receive an error that starts with “Error 1316.  A network error occurred while attempting to read from the file…”  There are a couple of causes for this issue and regardless of cause, the end result is that VMware Tools isn’t available.

First, look here:This VMware Knowledge Base article may give you some clues:  http://kb.vmware.com/selfservice/microsites/search...004331

If none of that guidance works, it’s also possible that a previous software installation is interfering with the VMware Tools installation and you just don’t know it. Microsoft makes available a free tool that can help correct this situation so that you can move ahead with the VMware Tools install.The fix is to download a free program from Microsoft that will totally and completely remove the old software.

You can Download the Microsoft Windows Installer Cleanup Utility from http://support.microsoft.com/kb/290301.