Can anyone suggest some tuning tips for running 2 small (1CPU,3GB RAM) Windows Server 2008 R2 VMs within ESX 3.0? The VMware tools install just fine, save the SVGA driver. I suspect that is the problem with the horrid RDP performance.
This is a display driver issue which is resolved in ESX(i) 4.0 Update 1. So, update.
Vmware used VMware SVGA-II (before 4.0.1), this is what is causing this issue with Win 7 and Win 2008. After 4.0.1, they started using VMware SVGA 3D (WDDM), which solved the problem.