If you want to extend a boot partition on Windows 2003 you need to use 3rd party applications to achieve your goal. I have blogged about these tools. You can find the posts here:
In Windows Server 2008, this process is a lot easier and will costs you maybe 5 minutes of your time.
Open the Virtual Machine properties, select your VMDK and change the value:
Wait till the task is ready:
Open the Server Manager, go to Storage and Rescan the disks
Right click on the volume and click on Extend Volume.
Follow the wizard:
After a couple of seconds and a refresh in the Windows Explorer, the partition will have it’s new size.
More info can be found here: http://bit.ly/sOnFS