If you look at the contents of the hard drive from your "host" operating system (not in VMware, but just looking at it like a directory), you'll probably see that it just has one really big file, maybe with a couple configuration files near it. Something like this (but probably with a different extension and all that):
Code:
rtucker@witte:~$ ls -l /opt/virtualbox/Windows\ 7.vdi
-rw------- 1 rtucker rtucker 32212378112 2011-04-05 22:27 /opt/virtualbox/Windows 7.vdi
That's the disk image for the "guest" (virtual machine). Doesn't matter if it's on an external hard drive, an internal hard drive, or a network file share: it's just a plain ol' file.
As long as you have room left on that drive for more stuff, you can have a whole slew of virtual machines on there. You might even be able to run multiple virtual machines at the same time...
Code:
rtucker@witte:~$ ls -lt /opt/virtualbox/*.vdi
-rw------- 1 rtucker rtucker 32212378112 2011-04-05 22:31 /opt/virtualbox/Windows 7.vdi
-rw------- 1 rtucker rtucker 1732322304 2011-04-05 22:28 /opt/virtualbox/chefdev-db.vdi
-rw------- 1 rtucker rtucker 1586528768 2011-04-05 22:17 /opt/virtualbox/chefdev-app.vdi
.....
rtucker@witte:~$ ps auxwww | grep VirtualBox
rtucker 16094 4.5 4.8 1127456 579308 ? Sl Apr02 231:35 /usr/lib/virtualbox/VirtualBox --comment chefdev-app --startvm <redacted>
rtucker 16143 8.2 9.5 1793532 1142504 ? Sl Apr02 420:59 /usr/lib/virtualbox/VirtualBox --comment Windows 7 --startvm <redacted>
rtucker 16178 4.5 4.8 1129760 580776 ? Sl Apr02 229:46 /usr/lib/virtualbox/VirtualBox --comment chefdev-db --startvm <redacted>
...
(I'm running VirtualBox on top of Ubuntu here, but it is functionally equivalent to VMware.)
As for running a Linode image locally... it is technically possible, but not easy. VMware and VirtualBox present a complete microcomputer simulation to the guest, going so far as to emulate a BIOS that jumps to the guest OS's master boot record.
Linode doesn't do that, since it is unnecessary: Linux natively supports the Xen architecture, and so the whole BIOS part is skipped and it starts by executing a Linux kernel, one which isn't even contained within your Linode's filesystem.
So, to make it work on VMware/VirtualBox, you'd need to install a kernel, and a bootloader to boot that kernel. Then, you'd have to make sure it is within a partition on a disk image with a partition table and the correct master boot record. THEN it will work.
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