Problem

I'd like to be able to run a hypervisor such as RHEV, ESXi, Citrix Xenserver inside a VMware VM. When I try to install the hypervisor, I see a message the the VM doesn't support hardware virtualization. How do I enable hardware virtualization?

Solution

The solution is to enable hardware virtualization -- a setting only found in the vCenter 5.x Web console.

1. In vCenter, create RHEL6 x64 VM — no OS needed.
2. Once the VM is created, set its OS option to “VMware ESXi 5.x (Experimental)”.
3. Login to the vCenter Web client (https://YourVCenterHost:9443/vsphere-client/) and go to the same VM you created above.
4. In the VM settings, select “Schedule VM Compatibility Upgrade”.
5. Start the VM to complete the upgrade (the fact no OS is installed in your VM is fine). The UI will indicate that vCenter successfully upgraded the VM. 
6. Shutdown the VM.
7. Again from the vCenter Web client, open the settings for your VM and expand CPU options.
8. The option for Hardware Virtualization should no longer be greyed out.
9. Check the associated option “Expose hardware assisted virtualization to guest OS”
10. Mount your hypervisor installation ISO and power up your VM.