Solved it myself.
The video driver installed was the standard VGA. I had installed VMware Tools, but that did not change the video driver.
I had to manually update the driver and point the driver installation to c:\program files\common\vmware\driver
s\wddm_vid
eo
That found and installed a driver. After rebooting, I can resize the VMRC screen as expected.
These links were helpful;
http://kb.vmware.com/selfservice/microsites/search.do?language=en_US&cmd=displayKC&externalId=1016770http://kb.vmware.com/selfservice/microsites/search.do?language=en_US&cmd=displayKC&externalId=1011709