I successfully installed CentOS 4 (RC1) on a VMWare 4.5.2 virtual workstation last night. When creating the new virual machine, I told the VMWare wizard that I'd be installing RHEL3. I used the VMWare console to point the virtual CDROM drive at each of the downloaded ISO images as needed.
The "time remaining" feedback while Anaconda ran was wildly inaccurate, but the whole process required only about 45 minutes (the host machine is a 2.8GHz P4 with 1.5GB RAM, I allocated 512MB RAM to the guest). At one point (during installing the pci utilities RPM) the installer seemed to be hung, but I suspended and resumed the guest workstation and that woke everything up again.
On the first reboot, the setup wizard asked me to install the disk that was labeled Extras. I don't know which of the 5 ISO images that is, and couldn't find that info on the CentOS web site, so I skipped that step. However, that screen still makes reference to other disks that may have been obtained from Red Hat -- probably needs to be cleaned up.
Also the wizard wanted me to register my RHN subscription, which I simply told it not to do.
I then logged in and attempted to install the VMWare tools. This (expectedly) did not go entirely smoothly. The app launced from the CDROM icon on the desktop was unable to mount the tools virtual disk, and "mount" from a shell or non-X11 virtual console didn't work either. I had to select "Install ..." from the VMWare menu, then reboot in single user mode to avoid X11 startup, then mount the disk.
After running the installer perl script, most of the tools work, but for X11 in particular I had to manually revert the /usr/X11R6/bin/X symlink to point back at Xorg, and restore the /etc/XF86Config file from /etc/X11R6/xorg.conf -- I then merged in the VMWare screen definitions from the XF86Config file written by the tools installer. Because I'm not using the vmware X server, the mouse does not move seamlessly on and off the vmware guest window; you have to manually grab/ungrab the pointer. Otherwise, though, xorg-x11 works just fine.