Running Xen inside VMware?
Solution 1:
You can run Xen under VMware but you will only be able to run Linux guests (and other Xen-enabled guests).
Without hardware virtualisation support Xen provides only paravirtualisation which requires modified system software in the guests. Most Linux distributions come with Xen-compatible kernels.
The virtual machine created by VMware is a computer without hardware virtualisation support. I.e. VMware does not virtualise hardware virtualisation features.
So you can run Xen and run Linux guests within it.
But you cannot run Windows guests inside Xen.
(And yes, it's fast enough. The problem is just the missing hardware virtualisation.)
Solution 2:
As the others note, lack of VT extensions are going to rule most hypervisors out. Not to mention overheads.
I have in the past used XenSource beneath another hypervisor (VMware mostly) for some specific staging tests. That works, but I wouldn't really recommend it.
Even if you do getting running you're likely to run into so many quirks that it doesn't justify itself as a reliable testbed. If hardware is a constraint you'd probably be better off dual booting.
Solution 3:
I use cheap desktops for this testing these days; you can get >4GB memory and VT CPU's.