VMware has released a patch for the date bug that was introduced by Update 2 for ESX 3.5(i). You can download it here.

VMware released an update to their ESX 3.5(i) platform, but introduced a bug with it. After deploying the update, virtual machines won’t start anymore. It wouldn’t be a big deal, if VMotion didn’t rely on this. Especially in a complete dynamic virtual environment (by using DRS) this will generate some issues. And of course in situations where the sys admin is enjoying a well-deserved vacation…

The problems appears to be in the licensing components. Setting the date to August 10 resolves the issue. Just make sure the time in your VMs isn’t set automatically by the VMware Tools.

More information here.