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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.

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That is seriously old code. Time to upgrade, I think. – MDMarra Jun 26 '12 at 13:14
upgraded to vSphere. everything is working wonderfully. – af-at-work Oct 10 '12 at 14:27
up vote 2 down vote accepted

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.

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Yes.. I think that is the only safe path. – af-at-work Jun 26 '12 at 13:05

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