Sounds like firewalls settings on the server not allowing incoming connections, but allowing outgoing connections.

Yes, check the firewall on the server and also try resetting the TCP/IP stack:
From a command line type 'netsh int ip reset reset.log'

That's what I was hoping... no firewall installed on the server and I have disabled the firewall on the clients. SEP 11 server is installed and I tried disabling the client just in case but didn't help. Anything else have a similar effect? Has to be something VMWare changed...

Are there any VMware interfaces left in the network control panel?
Did you try the stack reset?

The VMWare adapters are all gone. I did try to reset the stack but still no luck... The server can ping itself if that means anything.

Can you get to the server by other methods?, ie RDP or browsing to  //servername/c$

no can't browse or access it's web server... from clients. I can remote into it using logmein...

Ok so it looks like you can not connect to any MS server services but can connect by a 3rd party service.  Check your server log for any services that didn't start on the last startup, like maybe RACM

I have the following in the event log:

Event Type: Error
Event Source: ipnathlp
Event Category: None
Event ID: 32009
Date: 4/14/2009
Time: 9:58:26 PM
User: N/A
Computer: SERVER
Description:
The Windows Firewall/Internet Connection Sharing (ICS) service could not start because another program or service is running that might use the network address translation component (Ipnat.sys). This can occur when Routing and Remote Access is enabled. If this is the case, you must disable Routing and Remote Access before the Windows Firewall/Internet Connection Sharing (ICS) service can start.

Routing and Remote Access is disabled... I was just reading the following question and the description of the problem seems very similar to mine regarding pinging:
https://www.experts-exchange.com/questions/23614201/SBS-2003-R2-ICS-and-Remote-Access-problem.html 

What other services could be causing ICS to fail?

Also have the following Warning for each zone in DNS:

Event Type: Warnings:
Event Source: NETLOGON
Event Category: None
Event ID: 5781
Date: 4/14/2009
Time: 10:39:17 PM
User: N/A
Computer: SERVER
Description:
Dynamic registration or deletion of one or more DNS records associated with DNS domain 'TAPI3Directory.DOMAIN.local.' failed. These records are used by other computers to locate this server as a domain controller (if the specified domain is an Active Directory domain) or as an LDAP server (if the specified domain is an application partition).

Your DNS errors may be related to the loss of connectivity.  It sounds like there may a component of the VMware networking still installed that may be causing the ICS service trouble.
Check your services list to see if there is any VMware services left and disable if they are there.
Try running 'netch winsock reset'
Try rebooting with ICS disabled.
I would maybe try reinstalling VMware workstation and uninstalling again...maybe that will clean up the issue.  sounds like it was in bridged mode and now that its gone its not working right.

I can't find anything in services that is VMWare related... Neither netsh or ICS disabled helped.

Currently reinstalling SP2... why I don't know :-)

Update, I was able to get the clients to see the server and it's shared drives (think resetting winsock may have been responsible for it), at that point I left everything as is so that they can at least get some work done today. FTP seems to be the only service they need that is down at the moment.  But ICS is still failing to start and I have some DNS errors still being logged. I will need to continue this after business hours but glad something is back up at this time, thank you for all the late night support rynox! You rock!

No problem, its one of those issues that can be tough, been there.

Better late than never... The solution in the end was to use a different IP address for the domain controller, I don't know what VMWare did but the address the server was using during the install won't work anymore, the server is there, but won't reply to pings or any connections made to that IP. After changing the IP address the rest of the event log errors were easy to fix, rebuilt the DNS server and was up again as usual, just on a different IP.

Rynox, your suggestions to reset winsock led me to the solution as that removed all my TCP/IP entries and set the server to fetch a DHCP address which I could ping. Thank you for your help!