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- login in the Guest Account (I had to turn it on)
- select "Update VMware Tools" from the Virtual Machine drop down menu (other approaches to updating, i.e., form the VMware Tools Properties option don't seem to work)
- authorize the update by entering your admin username and password into a dialog box that will open
Then the VMware tools will update.
This is odd - perhaps only for those more used to Mac OS logic. Maybe posting here will save someone else a little time.
More update info:
http://www.vmware.com/download/fusion/