step 5 is where you set up the hard disc.

my VM installation is at work , so won't be able to check it till tomorrow, but i have a vague recollection that you can set where the hard disc image is  .

edit: last but one line of step 6:

- on the next screen , choose a name for the VM  and click on browse and navigate to the folder you created in step 5 containing your virtual hard disc.

this would appear to be where you are going wrong.

Cheers,

Keith.

Raidmax Sagitta case, E4400(overclocked),parkle 8600GTS,Asus P5N-E SLI (with VFM's chipset fan mod) ,250 GB SATA,Antec TruePower Trio 630W PSU , 2GB Patriot DDR2 6400 RAM.