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In a terminal window, open a local console.
vmware -G
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If this is the first time you have launched GSX Server, a dialog box asks if you want to rename existing virtual disks using the new .vmdk extension. Click OK to search all local drives on the host computer and make this change.
The converter also renames the files that store the state of a suspended virtual machine, if it finds them. It changes the old .std file extension to .vmss. However, it is best to resume and shut down all suspended virtual machines before you upgrade to GSX Server 2.
Besides renaming files, the converter updates the corresponding virtual machine configuration files so they identify the virtual disks using the new filenames.
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Start the Configuration Wizard. The default selection is Run the Configuration Wizard. To start the Configuration Wizard, click OK. You can also start the Configuration Wizard from the File menu (choose File > Wizard).

The Configuration Wizard presents you with a series of screens that you navigate using the Next and Prev buttons at the bottom of each screen. At each screen, follow the instructions, then click Next to proceed to the next screen.
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The Welcome screen appears.

Click Next to begin creating your new virtual machine.
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Select a guest operating system.

This screen asks which operating system you plan to install in the virtual machine. The Configuration Wizard uses this information to select appropriate default values, such as the amount of memory to allocate and disk space needed. The wizard also uses this information when naming associated virtual machine files.
If the operating system you are using is not listed, select Other.
You can find detailed installation notes for guest operating systems in Installing Guest Operating Systems.
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Enter a directory and display name for the virtual machine.

Enter a display name for the virtual machine or accept the default. The name specified here appears in the VMware Management Interface and the Connect to VMware Virtual Machine dialog box that appears when you connect to a virtual machine with the VMware Remote Console. It is also used as the name of the directory where the files associated with this virtual machine are stored.
Each virtual machine should have its own directory. All associated files, such as the configuration file and the disk file, are placed in this directory.
The default location is <homedir>/vmware/<guestOS>, where <homedir> is the home directory of the user who is currently logged on and <guestOS> is an abbreviation of the guest operating system you selected in the previous panel. If other users need to access this virtual machine, you should consider placing the virtual machine files in a location that is accessible to them. For more information, see Sharing Virtual Machines with Other Users.
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Select the disk type.

Select Create a new virtual disk.
Virtual disks are the best choice for most virtual machines. They are quick and easy to set up and can be moved to new locations on the same host computer or to different host computers. Virtual disks start as small files on the host computer's hard drive, then expand as needed up to the size you specify in the next step.
To use an existing virtual disk with this virtual machine, select Use an existing virtual disk.
To use an existing operating system on a physical hard disk (a "raw" disk), read Configuring a Dual-Boot Computer for Use with a Virtual Machine. To install your guest operating system directly on an existing IDE disk partition, read the reference note.
Caution: Raw disk configurations are recommended only for expert users.
To install the guest operating system on a raw IDE disk, select Use a physical disk. To use a raw SCSI disk, add it to the virtual machine later with the Configuration Editor. Booting from a raw SCSI disk is not supported. For a discussion of some of the issues involved in using a raw SCSI disk, see Configuring Dual- or Multiple-Boot SCSI Systems to Run with GSX Server for Linux.
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Select the size of the virtual disk.

Enter the size of the virtual disk that you wish to create. Use the default of 4000 (megabytes, or 4GB) or change the setting. The maximum size is 128GB for an IDE virtual disk or 256GB for a SCSI virtual disk. When you specify the size of the virtual disk, that amount of disk space is not immediately occupied by the virtual disk file. The virtual disk file grows as needed when applications and files are added to them, until the virtual disk reaches the maximum capacity you specify here.
Note: If this setting is larger than the capacity of the host machine's hard disk, a warning message appears. You can ignore this message for now, as you can move this virtual machine to a drive that can hold it at a later time.
Make the Virtual Disk Big Enough
The virtual disk should be large enough to hold the guest operating system and all of the software that you intend to install, with room for data and growth.
You cannot change the virtual disk's maximum capacity later.
You can install additional virtual disks using the Configuration Editor
For example, you need about 1GB of actual free space on the file system containing the virtual disk to install Windows 2000 and popular applications such as Microsoft Office inside the virtual machine. You can set up a single virtual disk to hold these files. Or you can split them up installing the operating system on the first virtual disk and using a second virtual disk for applications or data files.
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Enable the CD-ROM drive.

Most operating systems require the use of a CD-ROM for installation.
Select CD-ROM enabled. To enter the path to the CD-ROM drive, Click Browse or type the path to the CD-ROM drive. For example, /dev/cdrom.
If you wish, you can disable access to the CD-ROM drive later using the Configuration Editor (Settings > Configuration Editor) or from the Devices menu when your virtual machine is running.
In addition, choose whether you want the CD-ROM drive to be connected when you power on the virtual machine.
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Enable the floppy disk drive.

Select the Floppy enabled option. To enter the path to the floppy drive, click Browse or type the path to the physical floppy drive (for example, type /dev/fd0).
Some operating systems may require the use of a floppy drive during installation.
If you wish, you can disable access to the floppy drive later using the Configuration Editor (Settings > Configuration Editor) or from the Devices menu when your virtual machine is running.
In addition, choose whether you want the floppy drive to be connected when you power on the virtual machine.
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Configure the networking capabilities of the virtual machine.

To enable your virtual machine to use an existing Ethernet connection on your host computer, select Bridged networking.
To enable your virtual machine to use a virtual network limited to the host and the virtual machines running on the host, select Host-only networking.
To enable your virtual machine to use both an existing Ethernet connection on your host computer and also a virtual network limited to the host and the virtual machines running on the host, select Bridged and host-only networking. This allows for the sharing of files between the virtual machine and the host operating system.
To give the virtual machine access to the host computer's dial-up or external network connection using the host's IP address, select NAT. NAT is useful if you have a wireless NIC on your host (as bridged networking is not supported on wireless NICs) and allows for the sharing of files between the virtual machine and the host operating system.
For more details about GSX Server networking options, see Networking.
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Select the color depth for the virtual machine.

Select one of the following:
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8 (pseudocolor) - 8 bits of colors (256 colors) minimizes network bandwidth usage, but it is a pseudo-color or color map mode, not a true color setting. 8 (pseudocolor) is the default setting.
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15 (true color) - for true color resolution, at the expense of network bandwidth.
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16 (true color) - for higher true color resolution, at the expense of even more network bandwidth.
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24 (true color) - for the highest true color resolution, at the expense of the most network bandwidth.
A higher color depth setting slows down screen redraws when you use a remote console to view a virtual machine across a network connection. However, with greater color depth, you get better color resolution and fidelity, which may be an issue, depending on the applications you intend to run on the virtual machine.
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Review and finish the configuration.

This screen presents all the options you selected. Review it for accuracy and click Done to complete the virtual machine configuration.
Note: The Configuration Wizard allocates a default amount of memory to the virtual machine. You can change this setting in the Configuration Editor (Settings > Configuration Editor).