With VMware Server (and most likely Workstation), you can connect a USB device to the VM. I was using a USB flash drive to transfer a file because I didn’t want the VM on the network. However the USB drive can’t be mounted to the host and VM at the same time. If you connect the drive to the VM (using the VM->Removable Devices menu), it appears to the guest VM from disappears from the host. After you disconnect from the VM it’s available again to the host system. In hindsight this makes sense but it wasn’t immediately obvious to me when I was trying to copy the file.