Up/down keys, etc are not mapped properly in a machine hosted by Intrepid, when it was okay running under Hardy.
One fix was to .vmware/preferences, add:
hint.xkeymap.notLocal = "FALSE"
xkeymap.nokeycodeMap = true
Forgot where I got the above from. VMware server uses .vmware/config, if I remember correctly. Also VMware will pop up a warning when you start it.