Your GuestOS doesnt know that it is a VM and that you would like to set the time trought ESXi Host and VMware Tools. Depends on joining to a Windows DC or not your GuestOS ask time.windows.com or your lokal Windows DC or what ever you have configurated for w32time.
We always use the "native" GuestOS way to syncronize the time against our lokal stratum 1 device when ever its possible and not using some kind of cascading like stratum 1 -> ESXi Host -> Guest OS. So we disable the VMware feature.
Regards,
Joerg