What are the exact steps you did so far regarding update? Did you just run the OS update or did you also re-configure the VM and select the proper guest OS? Did you remove/uninstall all the hardware related drivers and services after you converted the Windows 2000 system? How does the virtual system's configuration look like (virtual disk controller, virtual NIC, ...)? Please post (attach) the VM's latest vmware.log file to your next reply post.
André