This error came up recently when powering on a Virtual Machine on a ESXi 4.1 host running inside of VMWare Workstation.  The specifice error message states that the  "host does not support vt" regardless of how it is configured for VT support.  I didn't see many clear answers on this without some digging but this error is a simple one but one that is also not possible to fix.  The reason behind it is that you are running nested Virtual Machines by having ESXi running within Workstation 7 and only 32-Bit Virtual Machines are supported in this setup.