Adding a new user without any other option than the username will create a home directory in /home.
Did you try out some settings or maybe even added a path where to create the new home directory?
Usually you must be root to add new users - did you alter anything that could have changed the default settings
Did you use some GUI tool to add the users or did you do it on the command-line?
I don't think that the VMware environment has any influence on this.
To correct the current situation remove those users and create them again properly. Have a look at the man pages for guidance.
Bye,
M
EDIT: You already answered some of the questions in interim posts. Also have a look at /etc/passwd to see the core user setting.
Linux