ANSWER AND SOLUTION:
(I hope)
VMWare often gives exclusive use of the floppy to one VM. So even the host cannot access it, and often other VM's running in parallell cannot either.

For booting VMware off a floppy and installing windows, I wrote a couple of tips here:
http://mawi.org/articles/VMWare_Boot_Disk.html

Good luck

Hi,
Now, I'm trying VMWare and I found a solution, very easy to activate the floppy drive in VMWare 4. This can boot in VMWare from floppy disk.

Step #1
Go to your main OS and desactivate de floppy and reactivate it.
This method disconnect the floppy disk of your main OS.

Step #2
Simply, activate the floppy disk that you desactivate in step #1

Step #3
Go to VMWare and remove the floppy disk of your Virtual OS and reinstall it with acces to your physical floppy A:\.

Important: Don't acces to your floppy disk between those step because this will activate the floppy in the wrong OS(I supposed that you want to boot from your floppy disk in a Virtual OS of VMWare)

Step #4
Start your Virtual Machine and all work's fine like a real PC.
Now, you can process to install your Operating System in your virtual machine.

I created a bootable Win98se CD by copying all the fies from the Win98se CD to a directory, invoking Nero with the make bootable option. When Nero asked me for a boot image, I used the floppy in drive A of my running computer

Welcome to Daniweb

Im glad you were successfull with your install