It works fine for me using FLARE 29 and vSphere. Are you trying to import the information using the vCenter server or the individual ESX hosts? If you are running vCenter then use the vCenter server to add in all the ESX Host and VM information.
Has anybody been able do to import virutal server information for an esx 4.0 server with flare code 29. I was able to discover the 3.5 esx servers without any issues. I tried the ESX import and the virtual center import neither of with worked with ESX 4.0  Below is the error I get.  There has been an error connecting to the server.  Would you like to...     Retry typing credentials?      Ignore the error?      Cancel the operation?
CX4-960 flare code 29 ESX 4.0 - import virutal server information