VMWare Server 2 RC2 fails to boot VMs

For a couple of days now, VMWare Server 2 RC2 was refusing to start virtual machines. It kept waiting at 95%.

It turns out that VMWare cannot boot virtual machines (or upgrade them) when kernel modules kvm_intel, kvm etc are loaded.

Here is the error message from hostd.log:

Question info: The virtualization capability of your processor is already in use. Disable any other running hypervisors before running VMware Server.

Of course the obvious solution is to rmmod the kvm related modules:

# lsmod |grep kvm
# rmmod kvm_intel
# rmmod kvm_amd
# rmmod kvm

The modules are most probably auto-loaded by /etc/init.d/kvm (but there may be other reasons too).