I found a very nice tool for shrinking of virtual machines and it’s freeware. The tool does not only shrink the virtual hard drive but can also optimize the virtual machine by deleting games, temp folders, … You don’t need two tools if you both use VMWare and Virtual PC because the tool can optimize the hard drives of both systems.

I could shrink one of my virtual machines from 36GB to 17GB. If you want to use the tool you have to have enough free disk space. First the tool does a cleaup op your drive, then is does a defragmentation and then it makes a new virtual machine and deletes the old one. For doing this he needs a lot of free disk space.

The tool is of Visizioncore and is called vOptimzer freeware.

A nice sample how you have to compact your virtual hard disk can be found on this link.