I have upgraded to Fusion 8.5 together with upgrading to Sierra. Since the upgrade, my Windows 8 virtual machine displays everything blurry when in full screen mode. It is as if there is a blur filter applied to the Windows screen output.
This happens only in full screen mode, not when I use single window or Unity mode. A screen capture from the Mac shows the full screen blur, a screen capture from within Windows does not show it. When I manually change the full screen resolution from 3840x1600 to 2560x1600, suddenly the image is crisp. But change the monitor to split view, so that the Mac sees a 1920x1600 display, and Fusion shows everything fuzzy again.
Solution to get it at least sharp again:
I had the setting Display | Virtual Machine Resolution | Full Screen at "Resize to fit screen". Once I changed it to "Center in the screen", and set the full resolution manually, the display is sharp. Unfortunately, this is hugely annoying when moving VMs between screens.And it indicates that the problem is caused by screen scaling kicking in when it shouldn't, maybe some off by one error in viewports.