I managed to get this working. However, and I cannot stress this enough, I dispute the validity of "vulnerabilities" returned. Our group that does the scanning where I work, expects mitigation of "vulnerabilities" found and you simply cannot patch individual vulnerabilities without risking breaking your VCenter Appliance installation irrevocably. For instance, I was expected to update the underlying Photon OS, Apache libraries etc. This is not an option as far as I'm concerned. That being said here is how I managed to get "credentialed Nessus scanning" to work on VCenter Server Appliance:
1) Logon to appliance as "root' at bash prompt
2) create "scanner" account (name what you want it to be)
useradd scanner
3) make scanner account an admin account
usermod -aG sudo "scanner"
4) visudo - match "root" settings" in /etc/sudoers
5) change default shell for "scanner" account
chsh -s /bin/bash "scanner"
6) from /home/scanner
chmod 777 -scanner -R