Thanks for the reply. I got a new drive and recovered from Time Machine. Then I took the failing drive (Invalid Node Stucture) and put it in a USB case and mounted it. I got most of my files off of it except the VM File. It fails when copying it over. Then I tried to directly open it from VM Fusion by just pointing to it hoping it would fix it in the boot up process. A message come down saying "read only drive". So other than trying to repair it using DiscWarrior (I don't have the funds for it right now), i know of no other way to fix it.
While I appreciate your comments on backing up using timemachine, copying the whole 200G file over to another drive evertime i use it is not exaclty efficient. There has to be a more gracefull way of backup like online or such that does incremental backups of a virtual machine without a super high cost.
I used Carbonite for the files on the machine before imported it. But I had to buy another subscription to backup the iMac too. Any thoughts?