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1.) If you want to keep the existing name, just specify another directory for the target .vmdk and move/replace the files when done.
2.) The required disk space depends on the used data blocks (i.e. blocks which are not zeroed out) on the source .vmdk. Maybe it makes sense to run sdelete in the guest OS to zero out unused blocks prior to converting the virtual disk.
3.) The VM's configuration needs to be changed/adjusted if the virtual disk's name is different.
André