By default, VMware Workstation 5.x use a memory mapped file for backing the RAM of the simulated machines. This eases the pressure on the system’s page file. If you host the virtual machine on an external drive, however, this can become a bottle neck, especially if the external device is slow (e.g. USB 1.1, flash, etc.).
As described in this VMware Knowledge Base Article, you can turn of VMWare’s behaviour to use a memory mapped file and force it to use the system’s paging mechanism instead. To do so, you just have to add
mainMem.useNamedFile=FALSE
to your virtual machine’s configuration file (.vmx).