If this doesn't work, you can try to manually download the VMWare Tools ISO, mount it in a virtual drive and install it. You will also see a new tab at the bottom of the screen prompting you to install the tools. Click on it to begin the VMware installation. The option to install VMware tools should no longer be grayed out. Once it has booted to the desktop, click on the menu at the top left corner and go to 'Player > Manage > Install VMWare Tools'.Click on 'OK' to close the window, and Start the VM as usual.(Previously, it had the Windows ISO selected) The right pane should now have the option 'Use Physical Drive > Auto Detect' enabled.

Click on the 'Add button' and select 'CD/DVD' Drive and select finish.(Technically optional, but this is what fixed it for me. Repeat the above step to remove the Floppy Drive.Highlight the CD/Drive on the left sidebar under the Hardware tab and click on the remove button.Select the 'Settings' option to edit the hardware settings.Open VMWare Workstation Player and right-click on the VM.How to install/reinstall VMWare tools grayed out

Even though I was doing this for Windows 10, this isn’t limited to Windows installations and should work regardless of the virtual operating system. For anyone facing this same issue with their VMware installation, here’s the solution in a pleasing format.

Vmware workstation on mac os x missing