Many people have complained regarding this problem, and feature requests have been submitted to Synaptics.
I have found one success report here. Although it is for Ubuntu, it seems to show that there is a solution to this problem.
I suggest that you try out the solutions outlined in the article below, for both host and guest:
Fixing Firefox Scrolling Problems with Dell Synaptics Touchpad
The article mentions two fixes:
- Remove Circular Scrolling option from the mouse properties
- Replace the Dell touchpad drivers by the Synaptics drivers
As the article says for the second one:
you can remove the Dell
touchpad drivers and install the
generic Synaptics ones, which work
better for a lot of people — but they
are missing some of the extra Dell
features. As long as your touchpad
does what you are expecting, it could
be worth it.
I suggest to create a system restore point before changing the drivers, just in case.
You can also always rollback the driver from the Device Manager.
EDIT1
Some people report success when using the ALPS driver rather than Synaptics.
As says Alps Touchpad Driver for Windows 7 :
some Dell laptops do not have
touchpads made by Synaptics. They have
Alps touchpads. If you are not sure
about what kind of touchpad you have,
please see this post about
identifying the correct model.
When I helped my user to upgrade his
Inspiron 1420 to Windows 7, I used the
driver for Vista. Here is the
link to the download. This driver
is for 32bit only. If this does not
work for you, you can also try the
driver for Windows 7. Here is the
link. The second link provides
both 32bit and 64bit drivers.
EDIT2
The following thread has some interesting info:
Problems with Synaptics touchpad not able to scroll in Guest OS (Windows XP)
The last entry in the thread says:
I have several colleagues who would
like to use Vmware on laptops for
support purposes. A few are trying
Sun's Virtualbox, and others are
trying Vmware. Scrolling works fine
with Virtualbox, but SUN's committment
to this type of product has burned
folks in the past.
It seems like VMware simply doesn't care much about Synaptics, and your device is not well supported by it. Although this doesn't directly answer your question, I think that you will need to move to Virtualbox in order to get the touchpad working.
To sweeten the pill, see How to Convert a VMware to Virtualbox.