I have 3 ubuntu feisty machines here that all run vmware server.  I installed vmware server as shown in the fourth post down on this link:

     http://ubuntuforums.org/showthread.php?t=338305&page=2

I ran exactly what the poster said with the exception of marking /etc/init.d/vmware executable.

Of these three machines one has the problem mentioned in this bug report.  The machine that is giving me problems had at one point been running dapper, which was updated to edgy some time ago, and then to feisty, whereas the other computers came  from clean installs of edgy to feisty.   There are also differences in the packages and services installed on these machines as well.

The problem is exactly as the bug submitter mentions, but occurs between all vmware guests and the vmware host.  The host and client can talk to all other machines on the network without and noticable problems. I can ssh from a vmware guest, to another physical machine, to the vmware host fine.  I can do the reverse just fine.  I can ssh from the host machine to the host machine without issue.  I can ssh from the guest machine to any other guest machine with no problems.  I seem to have general network connectivity inbetween the guest and the host(ie. they can ping each other, and a nmap inbetween the two hosts appears to yield proper results.

Depending on if the connection is coming from the vmware guest to the host or the vmware host to a guest the ssh -vvv looks a little different.  Here is my output for the ssh daemon on a netbsd vmware guest, and the ssh -vvv output for the feisty vmware host that has been causing me problems:

SERVER:
(root@deathgate:~)-> /usr/sbin/sshd -d
debug1: sshd version OpenSSH_3.9 NetBSD_Secure_Shell-20061016
debug1: read PEM private key done: type RSA
debug1: private host key: #0 type 1 RSA
debug1: read PEM private key done: type DSA
debug1: private host key: #1 type 2 DSA
debug1: rexec_argv[0]='/usr/sbin/sshd'
debug1: rexec_argv[1]='-d'
debug1: Bind to port 22 on ::.
Server listening on :: port 22.
debug1: Bind to port 22 on 0.0.0.0.
Server listening on 0.0.0.0 port 22.
debug1: fd 6 clearing O_NONBLOCK
debug1: Server will not fork when running in debugging mode.
debug1: rexec start in 6 out 6 newsock 6 pipe -1 sock 9

CLIENT:
(thrift@Epoch:~)-> ssh -vvv deathgate
OpenSSH_4.3p2 Debian-8ubuntu1, OpenSSL 0.9.8c 05 Sep 2006
debug1: Reading configuration data /etc/ssh/ssh_config
debug1: Applying options for *
debug2: ssh_connect: needpriv 0
debug1: Connecting to deathgate [192.168.0.77] port 22.
debug1: Connection established.
debug1: identity file /home/thrift/.ssh/identity type -1
debug3: Not a RSA1 key file /home/thrift/.ssh/id_rsa.
debug2: key_type_from_name: unknown key type '-----BEGIN'
debug3: key_read: missing keytype
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug3: key_read: missing whitespace
debug2: key_type_from_name: unknown key type '-----END'
debug3: key_read: missing keytype
debug1: identity file /home/thrift/.ssh/id_rsa type 1
debug1: identity file /home/thrift/.ssh/id_dsa type -1
debug1: Remote protocol version 2.0, remote software version OpenSSH_3.9 NetBSD_Secure_Shell-20061016
debug1: match: OpenSSH_3.9 NetBSD_Secure_Shell-20061016 pat OpenSSH_3.*
debug1: Enabling compatibility mode for protocol 2.0
debug1: Local version string SSH-2.0-OpenSSH_4.3p2 Debian-8ubuntu1
debug2: fd 3 setting O_NONBLOCK
debug1: SSH2_MSG_KEXINIT sent

It will sit there forever, so I just CTL+C.

in reverse...
SERVER:
(root@Epoch:~)-> /usr/sbin/sshd -d
debug1: sshd version OpenSSH_4.3p2 Debian-8ubuntu1
debug1: read PEM private key done: type RSA
debug1: private host key: #0 type 1 RSA
debug1: read PEM private key done: type DSA
debug1: private host key: #1 type 2 DSA
debug1: rexec_argv[0]='/usr/sbin/sshd'
debug1: rexec_argv[1]='-d'
debug1: Bind to port 22 on ::.
Server listening on :: port 22.
debug1: Bind to port 22 on 0.0.0.0.
debug1: Server will not fork when running in debugging mode.
debug1: rexec start in 4 out 4 newsock 4 pipe -1 sock 7
debug1: inetd sockets after dupping: 3, 3
Connection from 192.168.0.77 port 65534

CLIENT:
(thrift@deathgate:~)-> ssh -vvv epoch
OpenSSH_3.9 NetBSD_Secure_Shell-20061016, OpenSSL 0.9.7d 17 Mar 2004
debug1: Reading configuration data /etc/ssh/ssh_config
debug2: ssh_connect: needpriv 0
debug1: Connecting to epoch [192.168.0.24] port 22.
debug1: Connection established.
debug1: identity file /home/thrift/.ssh/identity type -1
debug1: identity file /home/thrift/.ssh/id_rsa type -1
debug1: identity file /home/thrift/.ssh/id_dsa type -1

The output looks very much the same between the vmware host and other vmware guests with other versions of linux.  Also using other users doesn't make a difference.

I've tryed this with both vmware server 1.0.0 and 1.0.2

The only other odd thing I have noticed is the machine who is acting as the vmware host won't allow any connections from a remote vmware server console, and doesn't have port 902 open.  This is not the case with vmware hosts that are acting as expected, although their configuration is the same as far as I can tell.  Can the bug submitter confirm or deny this is related to the issue?  Also could the bug submitter post the output from ssh -vvv and sshd -d so we can compare notes?