Upgrading VMware Tools fails on Windows Server 2008 with the message "Error 1316. A network error occured while attempting to read from the file C:\Windows\Installer\VMware Tools.msi"

This situation has been repeatedly observed on many guests after upgrading an ESX environment from 3.5u4 to 4.0u1 on Windows Server 2008 guest VMs. When upgrading to the newer version of VMware Tools it will try to uninstall the old tools first, but will fail in the middle of this uninstalling process.

VMware already have a kb article on a failed VMware Tools upgrade with the same error message here: http://kb.vmware.com/kb/1004331

You will also see the error message: "Setup cannot uninstall VMware Tools. Uninstall the application using Programs and Features in Control Panel and retry the installation."

Trying to uninstall from the control panel will fail since the .msi file is missing.

Solution

The quickest solution to this problem is to delete the registry key that says that VMware Tools is installed and then install VMware Tools the normal way.

1. Start / run / regedit

2. Search for "vmware tools.msi"

3. Delete the parenting UUID registry folder of the tools

4. Install VMware Tools from the menu VM / Guest / Install VMware Tools.