If anyone's interested, here's how I thinapp'ed it, and it works with extensions....with some caveats.
I used the guide from this link: http://communities.vmware.com/docs/DOC-19923.
Additional process I performed:
1. After Post-Scan, open the project folder and open HKEY_LOCAL_MACHINE.txt using Notepad.
2. At the end of the file, add the following entry:
isolation_full HKEY_LOCAL_MACHINE\SOFTWARE\Policies\Google\Update
Value=DisableAutoUpdateChecksCheckboxValue
REG_DWORD=#01#00#00#00
3. Save the file and exit Notepad.
4. Go to %ProgramFilesDir%\Google\Chrome\Application
5. Open the folder with the build number.
6. Delete the folder that holds the installer file. This should reduce the package size greatly.
7. Go to %ProgramFilesDir%\Google\Update and delete any cached setup files.
8. Build.
Surprisingly, extensions work well for me - I installed LastPass, Adblock Plus, and Click & Clean. The caveat is: after installing an extension, any existing extensions will crash. Just click on the pop-up to re-run the extension and it will be fine. All your extension install files should go to your sandbox directory.
I hope GoogleUpdate issue can be fixed though - Google Chrome update cycle is too rapid to keep updating and re-packaging.
