I agree with you Woody. The error message would say something like "application not found" if it were a path problem. As I'm the sole user of this machine without any Windows domains, and always login with full administrator privileges neither of those could be the issue.
It seems to be a message from the vmrun application itself. As vmrun is NOT called when I run vmplayer directly, I think the focus needs to be on vmrun.exe and why it's not accepting the "specified parameters".
Towards that end, I tried \fullpath\vmrun.exe without any parameters and received a help message from vmrun. In fact, I was able to go as far as vmrun -T player; which still gave me a help message. It's not until I entered the LIST command that I get the error. I also tried listRegisteredVM just for grins, and got the same error.