If you have a Windows 7 DVD Installation and you want (or have to) update an existing Vista virtual image that you have installed in VMWare’s (excellent) Fusion software, you need to boot from DVD. Usually, this will not happen by default. In VMWare Fusion 3, you need to select your Virtual Machine. It must be stopped. Go to the Settings and then the click on Advanced. Finally, click on CD/DVD. You can now start your Virtual Machine, put the DVD in quickly (unless it’s already in), and be ready to “Press any key to boot from DVD-” This may require you to give full focus to the Virtual Machine’s window.
Once you’ve installed Windows 7, or any other Windows version for that matter, you can completely remove the installation by shutting down the machine, right”clicking on it in your VM library, and selecting delete.