I need to install XP Pro instead of the already working XP Home edition. Would I loose any data / programs currently running under XP Home? What steps should I follow for the upgrade?
You should have a regular set of back ups in any case. But in general, upgrading the OS does not lose your files. You can start the upgrade process by simply inserting your XP Pro CD while Home is running you should get window asking you "What do you want to do?" Choose "Install Windows XP"
Hopefully this will be enough to get started. If not, you can also insert the XP Pro CD and restart the XP Home virtual machine. If you see the message "Press any key to boot from the cdrom..." quickly press a key and go through the normal installation process, accept the EULA and the XP Pro installer will locate your existing Home installation and perform an upgrade install.
If you have trouble getting the message "Press any key to boot from the cdrom", you can try making pressing Esc as soon as you see the VMware logo fly by (on restart). If you're quick you will get a boot menu in which you can choose the CD-ROM then you can boot from the cdrom to start the installtion. If you still have trouble starting the XP Pro installer, there are more things you can try which take a bit more to explain.