Setting up the paging file
The situation is a bit weird in this case, but I think the basic idea still holds: putting the OS files and the Virtual Memory Paging File (commonly known as a swap file) on the same partition is asking for trouble, if only because of fragmentation.
At the very least, I always try to create a seperate partition to use for swap, if not an actual seperate disk. The maximum wisdom in these matters is to divide your swap requirement over as much bus capacity as possible, but avoiding otherwise busy areas. So: not on the same partition as the OS. If there are two physical disks, then one-third on the disk that also has the OS and the rest on the other disk. Never on two partitions on the same disk; that would just make the head move around like mad and slow things down all around.
In this case, everything actually resides on the same file system on the same disk in the Host OS, so the logic hardly applies. My only reasons for creating a seperate virtual disk and using that is that the fragmentation issue is still relevant and that it is more manageable, in case I decide to expand the disk setup in future.
Like real ones, virtual disks can be swapped in and out of a system or replaced with bigger or smaller ones, but doing the same with partitions requires much more difficult procedures and low-level fiddling with tools like PartitionMagic. All in all, I would just a much avoid having to that altogether.
In the end, I formatted the (very much overcapacitated) swap drive and moved the swap file from the OS drive onto the swap drive.