Yup - I'm seeing this too (I've got an eval copy of Fusion, Version 1.1 (62573) - my full copy is on the way from Amazon!
I've just updated to10.5.2 with the subsequent Leopard Graphics Update. Unfortunately I didn't run VMWare before the graphics update, so I can't say which caused it.
Here's my sytem info:Hardware Overview:
Model Name: MacBook
Model Identifier: MacBook3,1
Processor Name: Intel Core 2 Duo
Processor Speed: 2.2 GHz
Number Of Processors: 1
Total Number Of Cores: 2
L2 Cache: 4 MB
Memory: 4 GB
Bus Speed: 800 MHz
Boot ROM Version: MB31.008E.B01
Chipset Model: GMA X3100
Type: Display
Bus: Built-In
VRAM (Total): 144 MB
Vendor: Intel (0x8086)
Device ID: 0x2a02
Revision ID: 0x0003
Displays:
Color LCD:
Display Type: LCD
Resolution: 1280 x 800
Depth: 32-bit Color
Built-In: Yes
Core Image: Hardware Accelerated
Mirror: Off
Online: Yes
Quartz Extreme: Supported
DELL 2005FPW:
Resolution: 1680 x 1050 @ 60 Hz
Depth: 32-bit Color
Core Image: Hardware Accelerated
Main Display: Yes
Mirror: Off
Online: Yes
Quartz Extreme: Supported
Rotation: Supported
Note that I'm using VMware on the larger of the two screens. Moving to the smaller one doesn't make any difference - even dropping below 1024x768 as the OP suggested.
Basically, moving windows around is choppy.
Guest OS is Windows XP MCE SP2, with 1.5GB of RAM allocated to it.
Any pointers gratefully received - even if they involve software updates, as hopefully my copy of Fusion will turn up tomorrow!