A virtual hard disk cannot be downsized once it is partitioned. This means you can only downsize it immediately after creating the Virtual Machine itself and before installing the Guest OS. Just about anything you can do shy of making the virtual partition smaller and thus not allowing a sparse disk to occupy the full capacity (not counting snapshots) will require the use of 3rd party utilities. As an example if you added a smaller right-sized disk to image the contents of the original to the smaller disk and then swap the disk out this requires imaging software not a part of the installed OSes. Even doing a V2V to get a smaller disk would require installing another product like VMware vCenter Converter Standalone in the Virtual Machine to create a new Virtual Machine from it with a smaller virtual hard disk.
As to the the Host loosing 40 GB with the creating of the Windows XP VM it sounds like you chose to pre-allocate the virtual hard disk however if you want expert analysis based on technical facts then... To help figure out what is what, the best way to provide comprehensive diagnostic information is to use the "Collect Support Information" command from the VMware Fusion (menu bar) > Help > Collect Support Information and then attach the .tgz file it created on your Desktop to a reply post.
Message was edited by: WoodyZ - Originally posted, Mar 27, 2013 8:33 PM.