So here's the lay out of the disk drives while in 7

And here is what it shows for VMW after I went through the Wizard to set it up

When I go to run it I get a warning about dual booting which I just skip over and then get this error and can't do anything but Abort

Now if I did the configuration steps correctly what it calls PhysicalDrive1 is what Windows has listed as Disk1.
I also tried going to the Disk Manager and setting Disk 1 to Offline and got the same error.
How I created the XP on the 1TB was to use Acronis True Image WD Edition and clone the 320GB to the 1TB. I even booted to the 1TB to make sure it was ok and would work and it did.
What did I do wrong?