I found an official VMware KB (2014936) how to do this with VMware Workstation. I have read some other things online for different (slightly similiar) scenarios where people suggested using VMware Converter, installing it on the XP Mode VM & then just moving the files over.
I want to get the communities thoughts on the matter since I couldn't find an answer via google or a search of the forums
Bear in mind I am new to VMware. Not totally new to virtualization, however my experience mostly lies in the VirtualBox, Microsoft Virtual PC & server arena (mostly personal use). I am having fun with ESXi so far though 