Then I started getting disk errors. Finally I figured out the disk
errors - I was hitting a 2GB limit of Fat32 under Linx 2.6.7. (I was
using a Fat32 FS because it's visible whether I boot to XP or Linux).
So I moved my VMWare virtual disk file to an ext2 partition.
What a difference in VMWare performance!!! After moving the virtual
disk to the ext2 filesystem, my computer is responsive and usable again.
VMWare already issues a warning if the virtual disk is on a network
filesystem. I suggest a similar warning for running from Fat32, because
the performance is absolutely terrible.