I got this error recently when I tried to install VMWare Workstation 8 on my laptop with Windows 7 64-bit. I found the fix in the registry and wanted to share because I couldn't find the solution anywhere on the internet.

Open the Registry Editor by going to Start &gt; Run &gt; then type 'regedit'

Browse to the following key...

HKEY_LOCAL_MACHINE\SOFTWARE\Wow6432Node\VMware, Inc.\Installer\VMware Workstation\DATASTORE_PATH

Change the value to the location you want your VMs to be stored (ie. 'C:\Virtual Machines'), then click OK. Now, re-run the VMWare Workstation installer.