I struggled for a few hours trying to find the answer to this. Hope I can save someone some time.
After migrating to Sonoma, upgrading to VMWare Fusion Player 13.5, I didn't immediately try out all my VMs (lots going on to distract me).
Today, upon booting a VM with Mac OS El Capitan, I got the login screen, and while VMWare would capture and release my mouse cursor and keyboard, it wouldn't take any input at all from either. Couldn't paste in, nothing.
I eventually discovered that I had to shut down the machine, choose VM Hardware compatibility level 16 (which is compatible with VMWare player 13.5 and many others), and un-check "allow hardware upgrades" (may not be the exact right label...).
At level 16 the VM works as it did before.
Strangely, earlier MacOSes (tried Snow Leopard) and later (tried Catalina) both worked great on the latest at this time: level 21.