I have tried everything and I missed the important part that I now would like some opinions and hopefully a fix for...
The OSX 10.8 Airplay's Desktop mirroring feature is limited to the CPU - the newer CPUs allow this feature to be enabled. BUT, the VMWares that are created indicate 'unknown' CPU in the 'More info' window.
That is what the problem is - that is why the feature is disabled. It believes that the CPU is not supported.
This is irrespective of the host, as my machine is a 2013 MBP - so.... THE MOST IMPORTANT PART : how do we fix this ? How do we have the VM believe that it is using a new gen cpu, just like the host ?