pparks1 said:
I would start with the following.
#1). Uninstall vmware player 3.x completely
#2). Uninstall Windows XP mode completely.
#3). Delete the base folder for the XP Mode install
#4). Reboot your host
#5). Install XP Mode file. (Windows XPMode_en-us). I happened to install mine to D:\Windows XP Mode. Inside of that folder, is a tutorial folder, Windows XP Mode base.vhd.lck file, KEY, VXPEULA and Winodws XP Mode base.vhd
#6). Install vmware player. Reboot if it says you must
#7). Open VMWare Player 3.1, click on File, Import XP mode.

Let me know what happens.
I may need to do that, we'll see. But in the meantime, I managed to download VMLite (not much is intuitive on their Web site!), and it created a Windows XP virtual machine from the XP Mode installation with no problem. Unless it proves terminally clunky. I'm going to go with that, rather than start all over with VMWare.

Thanks anyway, though. I'm going to keep these instructions on file.