OK, problem solved!!
First, I upgraded from VMFusion 6.0 to 8.0. That allowed me to increase the virtual disk size by 1 GB -- just enough to trigger a re-run of the virtual disk increase routine. Prior to the upgrade I couldn't successfully increase the disk size -- it would fail at the very end of the (long) process.
I restarted WIN 7 under VMFusion 8.0 and went to Computer Management|Disk Management. Now I could right click on my C:\ drive and the "Extend Disk" menu option was available. Prior to the upgrade, this option was dimmed out.
After this it appeared that nothing happened BUT if you go to the right side of the disk management UI, you will see "More Options". There you will find "Refresh". Doing that finally showed my disk finally expanded from 100 GB to 261 GB.
Thanks to all who chimed in to help -- it is much appreciated!!
Best
Harry
P.S. I'm going to mark this as "correct" so we can close this out, but it really reflects all the great help I received from folks in this thread.