We found, after some experimentation that the dynamically expanding disk feature takes up the smallest amount of space on your actual disk. An installation of Windows XP Pro SP3 with no other software added on takes up about 1.5GB. This is about as small as we could get it. From there we make appliance clones, and install LabVIEW. We chose 20GB after some experimentation. We found that LabVIEW 2009 and TestStand 4.2 and various other add-on tool kits took up about 10-12GB, so we opted to make our clone appliance size 20GB. If you are using other extensive tool kits such as Motion and Vision, Diadem, Robotics, etc. You will probably want an even larger disk size.
Finish the dialogs, and the VM and disk will be created. We typically like the bridged network adapter mode, so before starting your VM, click the "Network" hyperlink in the right pane, and select "Bridged Adapter" from the drop down menu. Bridged mode will essentially work transparently through the hosts network adapter without creating an additional (NAT) IP address. As you become more advanced with networking configurations, feel free to experiment, but for now this will make mapping drives to other resources on your network a lot easier.
