Sorry it took so long to get back to you on this. I didn't explain what I was trying to do very well, but you caught it. What management wants me to do is copy a sysprepped VM to multiple ESXi hosts in order to have a "generic" Win7 VM environment for multiple devleopers. The idea is to give the developers a thin client for their desktop, and be able to access their "desktop" from any location. The reason for server HW is for the fault tolerance.
You're right, I am confused... I've attached a screen-shot of the datastore browser, which doesn't show the "flat" vmdk file. The VM was configured with "thin provisioning" and as you can see, there appears to be plenty of space on the datastore, but when I copy the vmdk file to another ESXi host (whether using the datastore browser, VMware Converter, or FastSCP) the virtual disk file is expanded to the fully provisioned size, and that was what was causing all the problems I was originally having, which was that VMware couldn't "power up" the VM because there wasn't enough free space to create the swap and temp files that VMware need. I don't recall ever having this problem before, in copying VMs (Either on earlier versions of VMware Server, or VMWare Workstation), but then now that I think about it, I never tried copying the VMs to another host.
My "solution" for this situation was to use Symantec Backup Exec System Recovery Desktop Edition to create a backup of the VM, then restore it to a smaller provisioned disk (the original Win7 virtual disk was 60GB, the "new" Win7 virtual disk is 55GB.
It looks like this may have solved my problem, thought it would be nice if it didn't expand the disk file to the full size of the provisioned virtual disk file, since it takes nearly 5 hours to copy the virtual disk across the network.
Thanks again for your help!
Mark