1. Shut down the virtual machine.

2. Open VMWare Workstation Player and right-click on the VM. (Don't start the VM)

3. Select the "Settings" option to edit the hardware settings.

4. Highlight the CD/Drive on the left side-bar under the Hardware tab and click on
the remove button.

5. Repeat the above step to remove the Floppy Drive. (Optional, but this is what
fixed it for me. Courtesy: AskUbuntu forums)

6. Click on the "Add button" and select "CD/DVD" Drive and select finish. The right
pane should have now have the option "Use Physical Drive > Auto Detect" enabled.
(Previously, it had the Windows ISO selected)

7. Click on "OK" to close the window, and Start the VM as normal.

8. Once it has booted to the desktop, click on the menu at the top left corner and
go to "Player > Manage > Install VMWare Tools".

The option should no longer be greyed out. Click on it to install the VMWare Tools.
You will also see a new tab at the bottom of the screen prompting you to install
the tools.