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  1. I did the conversion under OSX's terminal with hdiutil and never had any problem on booting. There are certain coversion programs under windows which is not quite compatiable
  2. As far as I know, you need to covert the dmg to iso and mount it during start up, Vmware doesn't like dmg. the iso size will be approx 8.xGB after conversion Before that you need to patch the Vmware with Unlock all, latest ver was 2.0.7 Otherwise you won't have the the option to create an OSX VM