how do Iincrease the size of my virtual hard drive

you can only do that if the vdisk is set as scsi instead of ide and in 2003 server you will need a repartion tool
see
http://social.technet.microsoft.com/Forums/en-US/winserverManagement/thread/13418571-a48c-43c0-bc56-3295f8f94404/

in 2008 the hdd can be resized on the fly

First of all you should replace VMware Server with something that is still produced and supported, like VMware Player or or Oracle's Virtualbox.

I don't remember if VMware Server can do this, but check if you can just increase the size of the allocated space for the VM you want it for. Then, depending on the OS of your VM, you may be able to use builtin tools to extend the site of it's disk to use that additional space. For instance for XP or related OS's you can use diskmanagement and add a further partition, or if you have multiple partitions you can extend the data partition using the builtin diskpart command line utility to extend drive D:. Or if you are using a more modern M$ OS like vista then you can use diskmanagent itself to extend all your partitions to fill up the additional space.

You can also use tools like the PartedMagic LiveCD (just mount the iso for your VM and make sure it is set to boot from CD), and then use the Partition Editor of that tool resize and move partitions:

http://partedmagic.com

In order to Increase Size of Virtual Hard Drive

- Click on the Virtual Machine in Vmware Web Console
- Click on Icon  besides Hard Disk as shown below
- Click Edit
- Click on Increase Capacity ...
 
Now you can resize.

Hope this helps

Inorder to increase the Virtual Harddisk you first need to increase its size by editing the Virtual machine from the Virtual Machine Console --> in that select the desired VM and edit its setting and go to harddisk and increase its capacity --> Save it and finish it.

But this increased harddisk will only be reflected on the server by following the below steps.
Then you have to copy the attached EXTPART free tool to the server where the disk has to be incresed and finally login to that server and refer another attachment to increase the disk.

You dont need to reboot the server it is a simple step.    
ExtPart.txt
EXTpart.JPG

pritamdutt:

when following those steps I dont see "Click on Increase Capacity ..."

Please see if you meet the following criteria

1. If you have a snapshot, you must remove it before you can change the disk capacity.
2. You can only change the disk capacity for SCSI virtual disks.
3. The virtual machine must be powered off.

In case you are using IDE disk, what operating system have you installed in the Machine?

the vm is stopped. which file is the snap shot? and should I copy or delete it?

You are probably using "IDE" disks in that case, those can't be edited. Create a 2nd Virtual disk for that VM (this time as a SCSI disk), and then boot your VM so the drivers for SCSI get installed. This will probably require a reboot. Once the Diskmanagement of your OS sees the new disk reboot into PartedMagic. Now use CloneZilla which is included on that CD to clone your original Disk to the new one. When done, remove the old disk from the VM (don't delete it yet in case something went wrong. If your VM boot properly, then you can delete the old Virtual Disk.

You will need to delete all snapshots through the menu before increaseing the size.

I would recommend the use of VMware Converter, as it will increase the size of the disk and OS partition in on process and procedure.

Download VMware vCenter Converter here
http://downloads.vmware.com/d/info/datacenter_downloads/vmware_vcenter_converter_standalone/4_0

VMware vCenter Converter Standalone 4.x Documentation
http://www.vmware.com/support/pubs/converter_pubs.html

VMware vCenter Converter Standalone 4.3 User Guide
http://www.vmware.com/pdf/convsa_43_guide.pdf

rindi: they are scsi

pritamdutt:  trying now.

after following pritamdutt's instructions i then used easeus server edition to complete the resizing.

after following pritamdutt's instructions i then used easeus server edition to complete the resizing.