WoodyZ,
I was able to fix the corrupted virtual disk by running vmware-vdiskmanager. However when i started up Workstation 10 and tried to power up the VM, it failed just as before. After shutting WS10 down and restarting the host machine, I checked "Windows XP Professional-000003.vmdk" and it had been re-corrupted. It looks like we are corrupting the vdisk simply by starting WS10 and/or powering up the VM.
Do you think that Windows 8 (the OS of the host) could be causing the problem?
Re: your comment about reverting to "Windows XP Professional-000002.vmdk", what does this mean and how would I do it?
