edit: VMWare workstation and Server both should be able to open the .vmx file using a file open/import and pointing it to the vmx file (which should, hopefully, point correctly to the vmdk file - otherwise, you can hack the .vmx file yourself to point to the correct path).
Importing the vmdk into an VI3/ESX server will require a little more work, but the easiest way to manage it would be to use the VMWare Converter.
I have Win 2003 server. What I understand is to open the file from Win2003Server and from the VMware workstation. Do I need to install VMware workstation to open this file aside from using the VMware COnverter? Thanks.
no worries.. yes, you will need some flavor of vmware to open/run the virtual machine. VMWare Workstation is a great product for development (but you will have to pay for it).
The VMWare Server version is free. Depending on your needs, you can look at using the VMWare Player as well.
If you are looking at a full blown VMWare implementation you would look at purchasing Virtual Infrastructure 3 (VMWare ESX)
You can install VMWare Server/Workstation/Player on a windows 2003 host OS without too many problems provided you have the horsepower to run the virtual machine. Most of the performance issues I have seen with Virtual machines are related to RAM availability more than CPU.