After long process of Goggling and experimenting I found few documents which partial solution to Extending Hard Disk is given. I have create straight forward steps for future reference and going to blog this next. Please let me know if steps need more info or typo found. It took my 2:30 hours and let me know how much time you will need to do same thing using following steps
Here are steps to extend Virtual Machine’s Primary hard Disk
Scenario:
I have Virtual Machine(M1) with pre-allocated hard disk of size 6 GB. All the software and OS is installed on this disk. Latter state I need to install more software but disk is full and new software has to be installed on primary hark disk only. I have VM Server installed on Primary Drive. Let’s say Primary Drive is C. I want to make increase size to 10GB. My Virtual Hard Disk file is located at c:\mydisk.wmdk.
How to do?
This can be achieved by extending primary hard disk. Here are steps to do this. For this you need one more Virtual Machine. Assume we have two Virtual Machine M1 and M2. M1 is my working VM. M2 had Windows 2003 installed on it.
1. Turn off virtual Machine.
2. Start Command Window on Host Machine.
3. Move to VM Server directory. i.e. C:\Program Files\VMware\VMware Server
4. Type Command vmware-vdiskmanager.exe -x 30Gb c:\myDisk.vmdk ( This will create 10 – 6 = 4GB of unallocated space on primary drive)
5. Now Move to M2’s Edit Virtual Machine Settings. Select Hard Disk and Click Add button.

6. Select Hardware Type Hard Disk and Press Next

7. Select Use an existing Virtual Disk and Press Next

8. Select Primary drive of Machine M1 and Press Finish

9. Start Virtual Machine M2.
10. Move to Control Panel -> Administrative Tools -> Computer Management -> Storage -> Disk Management.
11. You will see you list of Virtual Disk with allocated and unallocated space. Let’s say new Virtual Disk is listed as Disk 1.

12. From the run menu type "diskpart.exe" to enter the command line utility to resize disk partitions in Windows Server 2003.

13. The command list volume will show you all the available volumes. Select your volume as shown below. select volume 1 corresponds to the "D" volume that I want to extend. Finally extend the volume with the extend command.

14. If all goes well, the partition will be immediately extended under the Disk Management snap in.

15. Shut down the second Virtual Machine(M2) and remove the disk from the second Virtual Machine. Power on the first Virtual Machine(M1) and check out your new space.
