I think the simple fact is you need a bigger physical hard drive. Something in the 750GB to 1TB range.
You should also look at what is using up space in the OS X side of your hard drive. Deleting files from OS X that you no longer need or moving them to an external drive. Have you though about creating another Virtual Disk inside the VM you want to expand. Then you would have a C and D drives in the virtual machine. By doing that you create a new drive of a total size of 100GB and it will only take up about 10MB of space initially until you start moving files to it. then it will grow in size only for the amount of files you move to it.
In all honesty if you need more the 200GB of HDD space for a virtual machine then maybe you should think about some type of external disk to store some of those files on. You can do that, use an external, inside the VM.
In one of my VMs I have 3 virtual disks all of 60GBs in total size and they only use a total of 10GB of physical hard drive space. I only use VMs for programs that I use that don't run on either Mac OS X or Win 7. I run XP in VMs on both platforms.