So how not installing OS initially solves the issue??! All I have is a blank VMDK file.
I think you misunderstood this. What WoodyZ said was just not to use the "Easy Install" feature (i.e. select the ISO in the installation wizard) but select "I will install the operating system later." and after initially creating the VM run the installation with booting off the ISO image. What "Easy Install" does is trying to setup the guest OS with some defaults which - depending on the guest OS (version, kernel, ...) could result in different issues, e.g. the one you see.
André