Hi Jeff,
The errors in your vmware.log suggest that the host's CD/DVD drive is encountering trouble trying to read data from the disc. Are you sure that the disc itself is OK? (I'm assuming that it is a regular internal CD/DVD drive... without the top part of vmware.log, I can't tell what it is or how it's connected.)
I'm not 100% sure, but my guess is that the Tools errors are being caused by the VM getting stuck while trying to read the CD/DVD, and that resolving the CD/DVD problem will make those messages mostly go away. Although I don't yet understand why the VM would get so totally stuck due to CD/DVD troubles...
If you have sufficient disk space available on your iMac, can you try to use the host's Applications > Utilities > Disk Utility to create an image file from the CD/DVD media, and then attach the resulting .cdr image to the virtual CD/DVD drive in Fusion? I suggest this as a diagnostic step (to tell whether the problem is with the disc, Fusion, or both), not as a long-term solution. 
Thanks,
--
Darius