Add the following line to the .vmx config file (see A Beginner's Guide to VMware Fusion if you need help) while the virtual machine is powered off and Fusion isn't running:

hgfs.linkRootShare = "FALSE"

Note that changing the shared folder settings will undo this setting.

princeaquasky wrote:

I have tried locating the .vmx config file but I cannot find it. I looked in the "Show Package Contents" and also ran the search command, but it does not seem to exist in my version of VMWare fusion 2.

Did you read the "Where to Find Things" section and specifically "Virtual Machine Files" in A Beginner's Guide to VMware Fusion which Eric linked to in his reply in this thread?

Anyway since you're using Fusion 2.x you can with the Virtual Machine shutdown, not suspended, from within the Guest OS you can then from the Virtual Machine Library windows ctrl-click the entry for the target Virtual Machine and select Show in Finder and then ctrl-click the Virtual Machine Document Package and select Show Package Contents and then ctrl-click the .vmx configuration file and select Open With > Other... > and select TextEdit and then you can change hgfs.linkRootShare = "TRUE" to hgfs.linkRootShare = "FALSE".

However keep in mind what Eric said: "Note that changing the shared folder settings will undo this setting."

princeaquasky wrote:

I actually wonder if it is possible to move this Virtual Machines folder away from my Documents folder to some other location (so that I do not clutter the Documents folder). Can you advise how to do it please? Will moving it not  upset VMware Fusion functions since I have already installed it and am operating with it?

You can run the Virtual Machine from any location that the User has full access to.  I have my Virtual Machines folder in the root of the HDD both on internal and external drives.  Only move the Virtual Machines when not running and Fusion is closed.  you can delete the old entry in the Virtual Machine Library and add it back in a number of ways. drag and drop it on the Virtual Machine Library or File > Open or just double-click the Virtual Machine and it will run and populate an entry on the Virtual Machine Library.

Note:  The first time you run a Virtual Machine after its been moved you will be prompted to whether you copied or moved it and of course the answer is moved.  It you say copied then the Mac Address of the NIC and the Virtual Machines UUID gets changed and this can effect various OSes in that for some Linux Distros you'd have to reconfigure the NIC in the Guest OS.  It can also be the tripping point to having to activate Windows again although by itself it shouldn't as long as you haven changed the amount of RAM or the size of the HDD as well since last activated..