Sign on the admin account
From VMWare, File / export,
then choose phyical machine in the source type,
check local machine if it is where you are running, the username and password fills in as the account you have signed in under
it will give an indication of checking
select the disks you want to include, I just use the system disk, and ignore page file
destination type is other Virtual Machine
give it a name and specify a destination for the output files
and so on, it takes a couple of hours to export usually on my system
Also you have to specify the location of the sysprep files, you can get the latest on MS's web site for your OS and SP, this is critical as there are bugs in the registry startup under certain conditions. MS just released a new sysprep for XP sp3. Make sure the files are extracted from the CAB file. Once complete you need to 'open' the image created and do the usual stuff with names etc. Use bridged networking and install VMTools if you want to use shared disks
That should get you started
