'Failed to initialize MKS drag and drop functionality' locks up VM

I am running Workstation 8 on Windows 7 Enterprise 64bit, and I get this error when using a VM:

"Failed to initialize MKS drag and drop functionality. Drag and drop operations into or out of the guest may not work."

I am never using drag and drop when the error occurrs and the OK button on the error doesn't work. I have to kill the Vm using Task Manager and then restart it.