I got the above error today after running Windows Update on my XP VM a few days ago. A quick search showed that the error is caused by a Microsoft update to the .NET framework. To resolve it, remove update KB980773 (Add/Remove programs, make sure “Show Updates” is checked; KB980773 is under “Microsoft .NET Framework 2.0 Service Pack 2”). I removed it and was able to log in without problems.
Edit 10/22/2010: You can also resolve this by upgrading your vCenter client to 4.1, which I recently did. 4.1 is available on vmware.com.