Hi,
Basically this has to do with hard disk buffering and disk alignment.
In short, if you create a new windows XP install then your disk gets aligned with OS X, removing the need for extra disk buffering.
You can test the difference by changing a parameter for your virtual machine, but as your disk is most likely not aligned, your performance is likely to suffer.
You can find it back in Virtual Machine -> settings -> Advanced -> Other -> Hard Disk buffering
There's an explanation of how it works in this -pretty long- thread: and also some steps on how you can convert your existing VM's if you really want to change it.
--
Wil
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