I got around the problem by creating a VM offline. Created a New VM in ESXi 4.0 and downloaded the vmx files from datastore browser, deleted the vmdk files. then on local host created the vmdk using
vmware-vdiskmanager -c -t 0 -a lsilogic -s 20GB myDisk.vmdk
Associated the newly created vmdk by editing the vmx (not required if using the same name). Uploaded the vmx folder with the vmdk using datastore browser on vsphere client connected to ESXi 4. Powered on the VM installed application software and the powered off, and downloaded the VM by exporting from vsphere client as ova image.The V/ova size on disk was ~322MB.