If I were to upgrade to Workstation 8 and then open my current VMs and ESXi host from the File, Open menu would it convert them to hardware version 8 or do I have to redo all my VMs?
Upgrading to HW version 8 is a manual process, which you would do per VM by right clicking it. You don't necessarily need to upgrade all the VM's. In your case it would only be necessary for the ESXi VM to be able to pass through VT-x by enabling the option I mentioned before.
Is it possible to run Workstation 7 and 8 on the same computer or will it want to remove 7 when installing 8?
No, the installation of VMware Workstation 8 will uninstall version 7.
I installed ESXi 4 and have the same problems installing VMs. I guess my computer doesnt like virtual within virtual. Its virtually too much to handle.
It's not the ESXi version which is relevant, it's VMware Workstation. Your CPU should be able to handle it. (Assuming you have sufficient memory!)
André
