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"

See: https://support.yubico.com/hc/en-us/articles/360016649039-Enabling-the-Yubico-PPA-on-Ubuntu

Configuring Yubikey PIN/PIV module:

ykman piv access change-pin
ykman piv access change-puk
ykman piv access change-management-key --generate --protect