How to increase vmware hard disk size

This won't work if have or care about snapshots from the VM.

You can use vmware-vdiskmanager to expand the image size. You'll need to shutdown the virtual machine first.

Once you have the image resized, you can use your OS disk partition tool of choice to extend the partition on the disk to the new size. If the disk you want to resize is the system partition in Windows, which it sounds like it is, you'll probably need to mount the disk in another virtual machine to resize the actual partition, or boot off of a rescue disk.

Although the link to the vdiskmanager is from vmware server 1, I believe the same app comes with VMWare Workstation.

I think you can use a conversion wizard for that. You can find it at File->Import or Export in the main menu.