Had a VM consisting of a base install of Windows Server 2003 SP2 with v4.0 update 1 VMware tools installed. Host was running vSphere 4.0 update 2. Cloned the VM, installed XenApp. XenApp load balancing showed CPU at 100%, even though the VM CPU was actually idling.
Upgrading VMware tools to 4.0 update 2 made no difference.
To fix: Uninstall VMware tools, reboot, and then install tools again.