I struggled with this for 8 hours yesterday.
Then the answer finally came to me after I installed the app in Windows XP Mode on Win7 Ultimate.
.NET framework 4 is not compatible with vSphere 5.0
I then proceeded to remove both vsphere and .net from my system. Upon reboot, I simply ran the vSphere executable and the installer orchestrates the install of .NET 3.5 SP1. The app is now working on my Win7 x64 system with .NET 3.5 SP1.
Hope this helps someone else!