A quick look at the file mediatek/mt7610e.bin in linux-firmware tells me that this file was not modified since it was added in Oct 2018. So I don't think the failure is due to a change in Kali 2023.3.

The error code that you get (-110) could mean timeout, although I'm not sure.

You run Kali in VMware, so my guess would be that the USB device can't communicate with the VM for some reason. Maybe USB devices won't work out-of-the-box in the VM, you might need to tweak the configuration of the VM, maybe enable something called "USB passthrough" if that exists. Maybe this answer https://stackoverflow.com/a/4616768/776208 can get you started.

This report has been filed against an old version of Kali. We will be closing this ticket due to inactivity.

Please could you see if you are able to replicate this issue with the latest version of Kali Linux (https://www.kali.org/get-kali/)?

If you are still facing the same problem, feel free to re-open the ticket. If you choose to do this, could you provide more information to the issue you are facing, and also give information about your setup?
For more information, please read: https://www.kali.org/docs/community/submitting-issues-kali-bug-tracker/