(clip from yesterday's VMWare blog post)
"Apple released the Mac OS X 10.5.7 Update (Tuesday) and I know many of you are eager to try it out. However, if your Mac has an ATI graphics card, and you rely on VMware Fusion's 3D Acceleration feature to run either Windows games or other Windows 3D applications in your virtual machines, we recommend that you do not upgrade your Mac to 10.5.7.

We are making this recommendation because the ATI driver in Mac OS X 10.5.7 breaks the 3D acceleration feature in VMware Fusion. You will likely see issues ranging from slow performance, to incorrect rendering, and even crashes, when you run your 3D applications in a Windows virtual machine on Mac OS X 10.5.7.

Both Apple and ATI are aware of this problem and are working to correct it in a future software update. In the meantime, if you have an ATI graphics card in your Mac and need VMware Fusion's 3D features to work, we recommend that you do not upgrade to Mac OS X 10.5.7."

The linked page also has some user reports on this problem. (I don't own fusion but until the fix is released it's recommended you turn off 3D in the prefs if you've already updated to 10.5.7.)
I had written ATI/AMD this morning to ask for their comments on this and they confirmed that this is a regression of theirs that was found too late to correct for 10.5.7. As far as they know, VMWare is the only app that has hit this bug. They are working with Apple and VMware to code and test a fix.
BTW - Although he says he's not used it much so far, I received this mail from a Fusion/ATI/10.5.7 user - but after learning more about the problem, I can only assume his 3D app isn't using a 3D shader/function that Fusion converts that triggers this problem (or he hasn't used a function in the app that does yet).

"Hi Mike, I just upgraded my X1900XT equipped MacPro (2007) to 10.5.7 before I saw the vmware fusion reports. BTW, I used the (hefty) Combo Updater that I downloaded from Apple's site, not the Software Update delta.
I have Windows 64-bit XP Pro installed via bootcamp, but run it virtually through VMware. My VMware build is Version 2.0.4 (159196). I started up my windows and Pro/E (3-D cad/modeling package), and it seems just the same as before I did the update. No crashes/freezes/slowdowns. (he later wrote he hadn't rendered any models) But I haven't spent a lot of time in it today, as I've been working on my dedicated PC workstation.

Just in case, though, I had tried to prepare ahead of time. At the end of my work day, I turned off all my programs, etc.:
1. Performed one last TM backup
2. Turned off TM
3. Installed the 10.5.7 update overnight.
4. Came back in this morning, did the reboot
5. Performed Repair permissions
6. Turned on TM again

What this does for me is it creates a last known good TM backup for yesterday--something that I can go back to within the next week or so if I come across problems. (In addition to TM, I also keep a known solid CCC clone of my boot drive on an ext FW drive (of a previous OS X install that was used for months/known reliable) and do not update the Cloned drive until months of use has proven the later OS X/updates are OK. I personally set TM off and use the TM menu "backup now" option as needed/desired (once or twice a day typically - I didn't want the default hourly backups).-Mike)
Have any other Fusion users reported no problems either, or am I the odd one?
(name withheld by request)

Not all 3D functions/conversions trigger it from what I've been told, but it is a known/confirmed issue by both ATI and VMWare.

Although it was said only Fusion was affected, I was curious about other VMs like Parallels Desktop and VirtualBox. (But from what I've later learned, apparently only Fusion's somewhat unique method of 3D conversions are affected.) So far several readers running Parallels Desktop 4.x w/ATI GPUs (X1600, 2600HD) replied they've not seen any issues like this after the 10.5.7 update. (Not had any replies from VirtualBox users but I doubt that VM is affected either.)

"Updated to 10.5.7 yesterday and have seen significant change in battery life. Generally battery life seems better, but when I'm just reading something off the screen and not scrolling or making any input, (estimated) remaining battery life jumps to unprecedented levels. As I'm writing this mail I'm looking at 6 hours, 20 minutes remaining. The best I've seen is 7:30 when reading some news of a webpage and therefore not using the keyboard. This is at least 1 to 1.5 hrs better than before. But I suspect this will only have effect when the machine is 'idle' and therefore can throttle down on the GPU/CPU. All these numbers are with BlueTooth off, WLAN on and nothing connected to the MacBook. It's a 2009 white MacBook 120GB/2GB.
Best regards,
Jakob N.
Denmark"

I asked Jakob to let me know about actual runtime when he's had more usage. (Impressive estimates - although the real bottom line would be actual runtime. Estimated times remind me of the "instant MPG" I get in the car while coasting on the freeway.) But as I mentioned, there are updated CPU and GPU power management extensions in 10.5.7 - it may be more aggressive about slewing down during idle periods.

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