In VMware ESXi 4.1, by default, the video drivers are not correctly installed. This is because of the fact that the old driver (which is installed by default) is a WDM type of driver. This type of driver has been kicked out of Windows 7 and Windows 2008R2 in favour of the newer WDDM driver architecture. As a result, the video is reverted to the Standard VGA adapter, which has terrible performance.

However, installing the VMware Tools does provide a correct driver, even though it is not installed by default. To install it, see the second chapter of the article: Windows 2008 R2 console freezes in vSphere console.