The Virtual Server Pause VM action pauses a Virtual Machine (If you want to save the contents of a virtual machine and free it from memory, you can use the Virtual Server Start VM action.
Virtual Machine Property Page
See the Virtual Server overview topic for details.
"Fail if the virtual machine is already paused"
If this option is selected and the virtual machine is already paused, the action will fail. Otherwise, it will continue.
"Fail if the virtual machine is turned off"
If this option is selected and the virtual machine is powered down, the action will fail. Otherwise, it will continue.