Well the short answer is... it looks like the virtual hard disk was deleted some how.
Information in the vmware.log file shows that the Virtual Machine Package some how ended up in the Windows Recycle Bin as referenced by "$RECYCLE.BIN" and then I'll assume was emptied at some point and now it gone.
"/Users/cclarke/Documents/$RECYCLE.BIN/Virtual Machines.localized/"
Not sure how "$RECYCLE.BIN" which is the folder that represents the Windows Recycle Bin became a part of the path but it shouldn't really be that way.