When using both Workstation 6.02 and Server 1.04, creating a pre-allocated disk with bring the entire host to it's knees until the operation is done. This has happened on both a dual-core Athlon64 running WinXP x64 and a quad-core Opteron server running Linux. This is regardless of whether the physical disk is completed unused by all other processes and whether few or many VMs are running.
Could something be done to limit how hungry this process is?
The process of creating a pre-allocated disk is truely resource hungry. The best was is not to create a disk beforehand but just allocate space as required and let the Guest OS do the job for you. Hope this helps