GF brought this to my attention: VMware (Fusion 2, at least) and XP are no longer happy together. I took an older clean XP VM and booted it without problem, then ran all Windows updates required, restarted and - it hung. No number of restarts/shutdown/startup kind of action makes any difference. Restarted in safe mode and found out that it hangs at agp440.sys. Wisdom-of-the-web says to boot in to the Recovery Console and turn off the agp440 service. Another place suggests that running the Repair installation from the Console also fixes it. Will look in to this tomorrow.