WP running on virtual machine localhost asking for FTP

You can evade the need for FTP credentials and installing an FTP daemon by putting this in your “wp-config.php” file:
define('FS_METHOD', 'direct');

I always create a world writable (chmod 777) directory on all computers on my network (safe for me as they are all mine), I call it “backup”, in its network name I include the machine name, like “backup T400”. I also map some parts of my file systems as being network readable, for instance “projects” or “pictures”. I do this on all computers, the real and the virtual ones. With this arrangement I can pull or push files across the network.
So in your case I could copy a new plugin zip file into the virtual machine by pasting it into the VM’s backup directory across the network, then in the VM I can pickup the zip and move it, maybe it needs a chmod or chown as well.

Thanks Ross, the FTP daemon worked.