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Running VirtualCenter in a virtual machine is fully supported by VMware to the same degree as if it were installed on a physical server. There are several reasons why deploying VirtualCenter in a virtual machine would be advantageous:

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Microsoft Windows Server Update Services (WSUS) 3.0 delivers new features including an MMC-based user interface with advanced filtering and reporting, improved performance and operational reliability, flexible deployment options to improve branch office support, and more content access through the Microsoft Update Catalog site.

http://www.microsoft.com/technet/windowsserver/wsus/default.mspx

If the user cannot access their local contacts when attempting to send an email message the problem may be that their Outlook Address Book account has been removed.

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