During an upgrade of an ESX 2.5.4 environment to ESX 3.0.1 I had a problem with one of the VM’s.
Every time I tried to clone or migrate a specific VM I got the same error over and over.
“Host does not support the virtual hardware version of the virtual machine”I realized that the VM originally was build on a GSX server.
I opened the vmx file and saw that the hardware versions were not updated properly.
The 2 hardware parameters in the vmx file is config.version = “x” and virtualHW.version = “x”. Where x is a number based on the host OS.
For a GSX these numbers are 6 and 2.
For an ESX 2.5.x these numbers are 6 and 3.
This meant that when the VM was moved from GSX to ESX 2.5.x the virtual hardware wasn’t upgraded properly.

The resolution was to completely uninstall the VMware Tools in the VM and make a complete reinstallation of the VMware Tools. Here after it is possible to upgrade the Virtual Hardware.
Now the migration of the VM to an ESX 3.0.1 host will run smoothly.