It may be possible, but your physical Linux installation will most likely have different drivers installed that the virtual machine needs. So when you boot the physical partition from within the guest you may face some problems. If you reconfigure the installation while it is running as a virtual guest you might not be able to boot the physical installation afterwards.
What about virtualizing the physical installation? Freeing up the disk space used by it, now, could be used for the virtual machine. Or maybe you can use the physical installation only for running it as a virtual machine. In this case you can switch the installation to the drivers VMware guest needs.
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I am doing something similar, and have no problem with drivers etc. both running the Linux partition as a VMWare guest and booting directly on the partition.
I have installed VMWare tools, and if you see my other post on starting vmware-user automatically (http://communities.vmware.com/thread/181894?tstart=0) you can have that working too.
I have no problem with the vmware stuff when booting natively, and I have seen no problem with drivers either.
The trick is to create a VMWare Guest under Vista and only use the Linux partition (or perhaps the whole drive if you have Vista on one and Linux on the other).
You might run into problems if you use Grub to dual boot - not sure about that one... The problem is that you should not access the partition where Grub is located from both Vista and Linux at the same time!
A workaround to this could be to have Grub installed twice, ie. if you have Vista on physical drive 0 and Linux on 1, and you normally boot using Grub on drive 0, you might be able to install Grub on drive 1 to enable you to boot your VM Guest from that drive... but I haven't done this so not sure if you'd run into any issues there...
Hope this helps...
And please let me know if you do this, if you succeed and if you run into any problems... as I might be facing the same problems at some stage...