[UPDATE] With the release of Workstation 8.0.1, I will see if this resolves the .2 issues.
I finally could not get the server going with VMware Workstation under Windows Server 2008 R2 so I decided to go with vSphere 5 and I have to say it runs very well. The server upgrade kept hanging on configuring services and although I could get it to reboot, I could not get the Server app to work - I had to connect from a separate computer. I actually have both OS running concurrently and have setup the server to auto shutdown and so far this has worked perfectly. I am still on 10.7.1 since Esxi has not been upgraded since August as far as I know. The only bad thing about this is that I had a cheap software raid card in my server that is useless now. Additionally, my backup esata array drive will not work with esxi (I will have to connect it to a NAS).
Just writing this as a follow-up. BTW I had to install SL Server and upgrade from there to get it to work in my hardware: ASUS p7H55 m pro/Xeon x3450 16GB Kingston DDR3 1333MHZ/OCZ 200GB SSD with 7TB HD storage.