Problem:
"Settings | VMware Tools Install" does nothing, where can I find the .rpm or tarball?
 

Solution:
"Settings | VMware Tools Install" is indeed the correct first step, but all this does is mount a tiny .iso in the first virtual CD-ROM drive.

1. "cd /root"
2. "mkdir /mnt/cdrom"
3. "mount /dev/hda /mnt/cdrom"
4. "tar xvfz /mnt/cdrom/vmware-linux-tools.tar.gz"
5. "cd vmware-tools-distrib"
6. "./vmware-install.pl"

Now hit "Enter" for each and every question. Note that the installer will attempt to compile some kernel modules, this will fail because it can not find the appropriate header files. THIS IS OK.

These kernel modules are not critical, although if you do find a way to compile them, then we'd appreciate fedback to post@atc.no

Anyway, the installer will refuse to continue at this point, so just hit Ctrl+C to abort installation. The most important tools have already been installed, all we have to do now is add them to the startup scripts.

Open the file "/etc/rc.d/rc.local" and add the following line:
"/usr/sbin/vmware-guestd --background /var/run/vmware-guestd.pid"

Execute that same line on the command prompt to start vmware tools without rebooting. It will emit a warning about one or more kernel modules, but this is harmless; the heartbeat monitor still works.