I have 2 windows XP hosts. One running VMware Workstation 6.5.2 and the other running VMware Server 1.0.9. Both hosts have PFSense virtual machines on them.
Since windows XP can only support up to 10 simultaneous connections, does that mean that the VM's can only support that many as well? Or is the guest completely independent from the host?
The gurest is completely independent form the host OS -
that limitation will not apply when you use bridged vmnets
Any limitations in accessing resources an OS has are the same reguardless if installed on physical hardware or virtual hardware. In others words Windows XP Professional only allows 10 simultaneously connections over the network to its resources whether it is the Host OS or the Guest OS and this limit includes all transports and resource sharing protocols combined.
Have a look at: Inbound connections limit in Windows XP