When using a Yubikey within VMware Workstation you should configure the following USB settings, per Yubico's documentation:
usb.generic.allowHID = "TRUE" usb.generic.allowLastHID = "TRUE" usb.quirks.device0 = "0x1050:0x0407 allow"
Configuring Yubikey PIN/PIV module:
ykman piv access change-pin ykman piv access change-puk ykman piv access change-management-key --generate --protect