ESX Server 3.5 U2 introduces quiescing support using VSS. However, VSS components are not installed when upgrading VMware Tools on a Windows Server 2003 virtual machine.
You can install VSS components manually by performing an interactive tools upgrade with VI Client. To do this open the console for the Windows Server 2003 VM. Click VM, and then scroll down to Install/Upgrade VMware Tools. Next, click on the Interactive Tools Upgrade radio button and then click OK. The Installation wizard for VMware tools will appear. Click next and the Program Maintenance window will appear. In the VMware tools Custom Setup window select VMware device drivers, then scroll down to Volume Shadow Copy Services Support and click on the down arrow to the left. Select “this feature, and all subfeatures, will be installed on local hard drive” then click next. Click Modify to begin the installation. When the install process has completed click Finish. Restart the virtual machine to ensure that the VSS components are installed and running.