The cause of the error is because either your bootloader (grub probably) cannot find the root partition, or the kernel you are using does not support the filesystem type. Make sure that the bootloader entry actually points to the root partition.
Ex: in the /etc/fstab file, make sure that your /dev/sd_ or /dev/hd_ partition where the root ("/") is correct.
And if you're sure that it's correct, check to make sure you have the filesystem support in your kernel.
My issue is that I compiled a kernel with ext4 as a MODULE (M) rather than building it right into the kernel (*)
If that description goes over your head, try these steps:
If you install RHEL linux again in vmware, partition your drives using ext3 if you haven't before. Using ext4 might be causing you headaches if the module isn't built in. You may have to custom partition in order to do so.
I'm guessing compiling a kernel is beyond your level, and since it's in a vm, I wouldn't bother unless it's important.
If it doesn't work setting all file system types to ext3, and it's not your grub configuration, it could be some kernel issue and you might want to try another kernel, Red Hat version, or distribution.
I hope this helps.