Ideas should work with other VM software such as Virtual PC, KVM, etc.

I know some people may think this is useless and obsolete with the ever increasing size of hard drives these days, but VM's can eat up space quick. If you're like me, you can have 5, 10 or more VM's.

I use Windows XP for my host OS running VMware Workstation 6.0.x.

Use nLite to slipstream SP3 and to remove unnecessary services and packages (additional languages). Map a drive to your host OS (or a network or VM server) to use for file storage. Similar to the previous point, point VM's at a central location for any files you can (ie ServicePackFiles). Delete (or move to central storage location) folders created by installed updates.

http://ask-leo.com/can_i_remove_the_servicepackfiles_folder_from_my_windows_folder.html

– Main.FredPettis - 18 Nov 2008