VMWare Virtual Disks creating 2 files

Hi all,
We are running VMWare Server 1.0.2 Build 39867 and have an interesting behaviour with one of the VM's it runs.
One of the VM's has 3 Virtual disks as below
C 17 gig
D 20 gig
E 20 gig
However in the directory on the host that stores those virtual disks I noticed it was using almost twice the space.

Files are NZLSVPRT003-C-flat.vmdk (17 Gig)
NZLSVPRT003-D-flat.vmdk (20 Gig)
NZLSVPRT003-E-flat.vmdk (20 Gig)
NZLSVPRT003-C.vmdk (1k descriptor file referencing the -flat file)
NZLSVPRT003-D.vmdk (1k descriptor file referencing the -flat file)
NZLSVPRT003-E.vmdk (1k descriptor file referencing the -flat file)
NZLSVPRT003-C-000001.vmdk (12 Gig)
NZLSVPRT003-D-000001.vmdk (19 gig)
NZLSVPRT003-E-000001.vmdk (20 gig)

The vmx file has the following.
scsi0:0.present = "TRUE"
scsi0:0.fileName = "F:\NZLSVPRT003\NZLSVPRT003-C-000001.vmdk"
scsi0:0.redo = ""
scsi0:1.present = "TRUE"
scsi0:1.fileName = "F:\NZLSVPRT003\NZLSVPRT003-D-000001.vmdk"
scsi0:1.redo = ""
scsi0:2.present = "TRUE"
scsi0:2.fileName = "F:\NZLSVPRT003\NZLSVPRT003-E-000001.vmdk"
scsi0:2.redo = ""

So considering that I would expect the VM to be firing up the monolithicsparse -000001 virtual disks and the others are not required.
However what I am seeing in the vmware log is different.
It definitely opens the -000001 files, however then it proceeds to open the -flat files and their descriptor files.
The upshot of which is the virtual disks are taking almost twice as much space as they should.
Please note, there is another VMWare VM running on the same host not exhibiting the problem. Anyone got any ideas why this is and how I resolve the issue?

Thanks in advance for any help.

Apr 20 12:28:16: vmx| DISK: OPEN scsi0:0 'F:\NZLSVPRT003\NZLSVPRT003-C-000001.vmdk' persistent R[(null)]
Apr 20 12:28:16: vmx| DISKLIB-DSCPTR: Opened [0]: "NZLSVPRT003-C-000001.vmdk" (0xa)
Apr 20 12:28:16: vmx| DISKLIB-LINK  : Opened 'F:\NZLSVPRT003\NZLSVPRT003-C-000001.vmdk' (0xa): monolithicSparse, 35651584 sectors / 17408 Mb.
Apr 20 12:28:16: vmx| DISKLIB-DSCPTR: Opened [0]: "NZLSVPRT003-C-flat.vmdk" 0 (0xe)
Apr 20 12:28:16: vmx| DISKLIB-LINK  : Opened 'F:\NZLSVPRT003\NZLSVPRT003-C.vmdk' (0xe): monolithicFlat, 35651584 sectors / 17408 Mb.
Apr 20 12:28:16: vmx| DISKLIB-LIB   : Opened "F:\NZLSVPRT003\NZLSVPRT003-C-000001.vmdk" (flags 0xa).
Apr 20 12:28:16: vmx| DISK: OPEN 'F:\NZLSVPRT003\NZLSVPRT003-C-000001.vmdk' Geo (2219/255/63) BIOS Geo (2219/255/63) freeSpace=30279Mb
Apr 20 12:28:16: vmx| DISK: OPEN scsi0:1 'F:\NZLSVPRT003\NZLSVPRT003-D-000001.vmdk' persistent R[(null)]
Apr 20 12:28:17: vmx| DISKLIB-DSCPTR: Opened [0]: "NZLSVPRT003-D-000001.vmdk" (0xa)
Apr 20 12:28:17: vmx| DISKLIB-LINK  : Opened 'F:\NZLSVPRT003\NZLSVPRT003-D-000001.vmdk' (0xa): monolithicSparse, 41943040 sectors / 20480 Mb.
Apr 20 12:28:17: vmx| DISKLIB-DSCPTR: Opened [0]: "NZLSVPRT003-D-flat.vmdk" 0 (0xe)
Apr 20 12:28:17: vmx| DISKLIB-LINK  : Opened 'F:\NZLSVPRT003\NZLSVPRT003-D.vmdk' (0xe): monolithicFlat, 41943040 sectors / 20480 Mb.
Apr 20 12:28:17: vmx| DISKLIB-LIB   : Opened "F:\NZLSVPRT003\NZLSVPRT003-D-000001.vmdk" (flags 0xa).
Apr 20 12:28:17: vmx| DISK: OPEN 'F:\NZLSVPRT003\NZLSVPRT003-D-000001.vmdk' Geo (2610/255/63) BIOS Geo (2610/255/63) freeSpace=30279Mb
Apr 20 12:28:17: vmx| DISK: OPEN scsi0:2 'F:\NZLSVPRT003\NZLSVPRT003-E-000001.vmdk' persistent R[(null)]
Apr 20 12:28:17: vmx| DISKLIB-DSCPTR: Opened [0]: "NZLSVPRT003-E-000001.vmdk" (0xa)
Apr 20 12:28:17: vmx| DISKLIB-LINK  : Opened 'F:\NZLSVPRT003\NZLSVPRT003-E-000001.vmdk' (0xa): monolithicSparse, 41943040 sectors / 20480 Mb.
Apr 20 12:28:17: vmx| DISKLIB-DSCPTR: Opened [0]: "NZLSVPRT003-E-flat.vmdk" 0 (0xe)
Apr 20 12:28:17: vmx| DISKLIB-LINK  : Opened 'F:\NZLSVPRT003\NZLSVPRT003-E.vmdk' (0xe): monolithicFlat, 41943040 sectors / 20480 Mb.
Apr 20 12:28:17: vmx| DISKLIB-LIB   : Opened "F:\NZLSVPRT003\NZLSVPRT003-E-000001.vmdk" (flags 0xa).
Apr 20 12:28:17: vmx| DISK: OPEN 'F:\NZLSVPRT003\NZLSVPRT003-E-000001.vmdk' Geo (2610/255/63) BIOS Geo (2610/255/63) freeSpace=30279Mb