"Virtual Machine is configured to use a device that prevents the operation: Device 'Hard disk 1′ is disk which is not in persistent mode. Device 'Hard disk 1′ which is not in persistent mode".
This is a bug in VMWare VSphere 4.0 or 4.0 update 1.
This is because machine went into standby mode because of power settings, and the disk was in independent non-persistent mode, and DRS is enabled in the virtual cluster.
The way I fixed this was to un-register the VM machine. Create a new machine with same specs, then instead of creating new hard drive, just add the existing hard drives from original machine.
After I did this, I did a storage migrate to put all the files together and have the names of the disks all match the name of the new machine.