vSphere Client Error parsing the server “SERVER IP” “clients.xml” file. Login will continue, contact your system administrator

This is solution for xml error
Remove this KB980773 seems to have undesired effect on MS DotNet Framework required by the VMware vSphere client to run. I believe we will have to wait for VMware to fix it or to push Microsoft to fix it
1. Download the file system.dll. This file is typically located in %SystemRoot%\Microsoft.NET\Framework\v2.0.50727\ directory of a non-Windows 7 or Windows 2008 R2 machine with .NET v3.5 SP1 installed.
2. Copy the file to C:\Program Files (x86)\VMware\Infrastructure\Virtual Infrastructure Client\Launcher\lib.

Note: If the lib directory does not exist, create it.
3. Open VpxClient.exe.config in a text editor. The file is located at C:\Program Files (x86)\VMware\Infrastructure\Virtual Infrastructure Client\Launcher.
4. Add the following three lines to VpxClient.exe.config, just before :
5. From Windows 2008 R2 or Windows 7 System Properties, click the Advanced tab > Environment Variables.
6. Create a new System variable called DEVPATH and assign the value:
C:\Program Files (x86)\VMware\Infrastructure\Virtual Infrastructure Client\Launcher\Lib
Note: For 32bit operating systems, replace Program Files (x86)with Program Files.
You can now launch vSphere Client from a Windows 7 or Windows 2008 R2 machine. You may have to right-click on the vSphere Client icon and choose Run as administrator.