Yes, you can install Alfresco on Windows / Linux on VMWare. We prefer Linux as you can custom build a lean build to run on VMWare. With regards to install paths, it depends. Is your VMWare Server SAN attached or using a local disk array? What's the RAID configuration? The default install paths would work fine, but how the VMWare infrastructure is set up needs to be considered to configure Alfresco optimally for performance and resilience.