Thanks Andre for keeping in touch with me.
here is the image of the directory that looked prior to running the command :
and here is where the vdisk manager is present :
So this is exactly what i did :
1 - I used Sdelete to zero out free space on C:\ drive inside the virtual machine. (This C:\ drive that I mentioned in this line is of guest OS NOT of host).
2 - Then I closed the VM and ran vdisk manager in host OS using cmd with admin privileges.
3 - I typed the command : "vmware-vdiskmanager -r "C:\Virtual Machines\Windows XP Professional\Windows XP Professional.vmdk" -t 0 F:\new.vmdk" (because the space on C:\ drive of host OS was running low thats why I chose F:\ drive for new.vmdk)
4 - After executing this command it stated something about the configuration file (I didn't snapped the image of process because I thought it was going okay). In the below line it said "Converting " and showed the progress in the percentage ahead of it. The progress was gradually increasing so I thought the process is going fine.
5 - After the conversion completed successfully I renamed new.vmdk to Windows XP Professional-flat.vmdk in F:\ drive (I thought the previous one had also "-flat" in its name so the new one must also has it). Then I replaced the newly created .vmdk with old Windows XP Professional-flat.vmdk in C:\ drive of host OS.
6 - I ran the VMware Workstation to check if disk type had changed but NO... It said "The file specified is not a virtual disk" (see below)
A few more notes :
a) I have only done creating and replacing
b) I did not changed the vmx configuration file manually (by manually i mean opening vmx with notepad and editing things), so please tell me if I have to do so.
c) If have taken any wrong step please tell me that too.
d) Now my directory looks same as image 1 (That last .vmdk file is the new one)
THATS ALL WHAT I DID!
I'm looking forward for your reply.
I'm attaching all files except last .vmdk in image 1 in a zip file.