By default with VMware Server 2.0 Beta, debugging mode is enabled for all hosted virtual machines. This has been the case with every VMware beta product that I can remember. The problem with debugging mode is that it significantly slows down the performance of all on-board virtual machines so much as to make them unusable.

This time, however, there is no easy way to disable it. However, I have found the following workaround for users who host VMware Server on Linux...

If you're running VMware Server on a Linux host, you can run the following commands to disable the enforced debugging mode. In doing it myself, my virtual machines increased in speed significantly:

cd /usr/lib/vmware/bin
mv vmware-vmx-debug vmware-vmx-debug.bkup
ln -s vmware-vmx vmware-vmx-debug
mv vmware-remotemks-debug vmware-remotemks-debug.bkup
ln -s vmware-remotemks vmware-remotemks-debug

Reboot your box to be certain.

Source:

http://www.realtime-windowsserver.com/2008/01/disabling_debugging_in_vmware.htm
http://communities.vmware.com/thread/112685?tstart=0