Maybe this will help anyone else stuck on the installation.
For a long while my Windows 7 install inside VMWare 7 would get stuck at “expanding files 0%”. I kept thinking it was my machine and setup that was causing issue, after all a x64 tablet pc is not your most common config. Just in case anyone is curious I’ve got a Thinkpad x201t.
After trying both 32bit and 64bit Windows 7 version, upgrading my RAM from 4GB to 8GB and trying out changing the virtual disk location from ntfs to ext3 and back I was quickly running out of options.
Unfortunately VMWare support is extremely picky about your os versions and didn’t even try to suggest anything unless I downgraded to OpenSuse 11.2 – which was not an option due to certain driver compatibility.
Fortunately I decided to give it one more go and instead of using my external dvd drive for the Windows 7 installation I saved the DVD as iso and run the installation that way. And there you go, that was the solution!
My suspicion was the fact that my DVD drive is usb powered, however while looking for a solution I saw similar questions being asked for other linux hosts and no mention of external DVD drives, so it might be a more generic issue.