i would first turn off NTFS compression on Vmware disk files !
Agreed - if (OP) you don't have sufficient disk space, run the VM off a Firewire or USB2 external disk - they're cheap these days. You can get 120-160GB USB2 for like $60.
Does that mean that vmware is incompatible with file compression ?
Never seen an official statement, but honestly it's a risky scenario !
it's like running Exchange store files or SQL / Oracle DB files compressed , not really a smart move
and like previously posted, hard disk space is so cheap, it's really not worth the hassle of troubleshooting issues with file compression
there's also a big performance hit, NTFS compression is not really fast with large files ...
--My Squid proxy appliance's IDE file got compressed (XP Pro laptop host) and I didn't even notice till yesterday@@ - but it's only 1.6GB.
@@ jkdefrag kept moving it around all over the place.
--At the Host OS level, you can -do- it -- (capability) but it's not RECOMMENDED (by Teh Gurus.)