I have read in some of the older posts here about issues installing WinFLP in VMware. First of all, WinFLP or Windows Fundamentals for Legacy PCs (WinFLP) is a small-sized version of Windows XP used in special cases where hardware was limited, yet an upgrade was needed. It didn't take off as they may have thought and it got shelved to the back burner. VMware is a great app to play with things like this as well as it's intended use.
Anyway, the point to this post is that I've seen many complain about the BSOD on installation that many users including myself received when trying to install WinFLP in VMware. I played around with the settings and found a way to make it all work without a lot of fuss and with the current VMware version 7.1.3 build-324285.
1. Mount .iso or insert WinFLP disk
2. Create a new VM
3. Choose to install OS later and then choose Windows XP with the default 512MB of memory. Next choose the BusLogic IDE Controller on setup. Finally remove hardware you don't intend on using such as Sound, Floppy and other stuff.
With those settings in place, the installation runs smoothly.