As per jmattson i have to take back some points i wrote earlier.
1. vmotion and storage vmotion works flawlessly even when you have nested ESxi
2. I was uanble to get Fault Tolerance working
- My ESXi hosts are in cluster with Vsphere HA enabled
- I have a centralized NFS data store which stores fileset of VMs
- I received the following message which clearly points to an unsupported CPU
3. I tried to install vcenter server appliance in OVF format and failed. It points to cpu incompatibility as well.
All said I can live without Fault Tolerance. Thanks for your help j.