Oddly - this seems to be fixed now. I ran updates this morning and that included some linux headers.
Usually after new headers are installed I am prompted to reinstall vmware. It did not ask me to this time.
But when I started the vm and went to full screen mode it went to the correct resolution.
I restarted vmware and the vm desktop a couple of times and it is now behaving correctly.
Thanks for you help. Do you want any further information from me?