Hi there
When creating a Virtual Machine with vmware rel 8 and using the CREATE NEW VIRTUAL MACHINE Wizard installation will loop if you enter the product key before installing.

DO NOT ENTER THE PRODUCT KEY prompted by the create Virtual Machine Wizard

If you do you get message a short while into the install process -- Cannot read Product key from the unattended setup file and it will reboot and try again and again.

Just create the VM manually (i.e don't use the Create Virtual Machine Wizard) and enter product key as you would with a normal version of Windows.