Why I mentioned it as full remastering is, DSL now offers a convenient way to create your own DSL flavor using DSL extensions. But I prefer full remastering since it gives me more control.

Its mainly through trail and error that I found the steps to significantly change DSL to suit my needs. Of course few links helped me. But nearly at the end of my quest I came across a wonderful book by the creators of DSL, and I think that is the definitive guide you should read if you are interested in remastering.

Negus Live Linux Series The Official Damn Small Linux® Book: The Tiny Adaptable Linux® That Runs on Anything
by Robert Shingledecker; John Andrews; Christopher Negus

I thought of creating a VMware Image of Sahana with a easy download size as much as possible. Making changes to Debian or Ubuntu is very much easy and I could have easily created a Sahana VMWare image based on that. But its not nice to expect a user to download a 700MB image to try out Sahana. So I evaluated several ISOs and finally selected DSL which is around 50M in size.
After successfully running the DSL ISO in VMWare I tried to install DSL in a virtual disk.
At first I create the virtual disk with QEMU and modified the VMX file to use it, I expected a SCSI virual disk and I could not get VMWare to recognize the disk I created with QEMU as SCSI.

Just because its virtual do not think licenses also become virtual ;-)
so restriction with per seat licenses,ect apply equally in this virtual domain. Read http://www.vmware.com/download/eula/vmimporter_v20.html carefully ,specially section 3.6

"Licenses required for third-party software. The Software enables you to run multiple instances of third-party guest operating systems and application programs. You are responsible for obtaining any licenses necessary to operate any such third-party software, including Guest Operating Systems."

then read
http://72.14.205.104/search?q=cache:5MmpcSVC4NAJ:download.microsoft.com/download/6/8/9/68964284-864d-4a6d-aed9-f2c1f8f23e14/virtualization_brief.doc+vm+image+download+license&hl=en&ct=clnk&cd=8&client=iceweasel-a
http://www.vmware.com/solutions/whitepapers/msoft_licensing_wp.html
http://www.vmware.com/solutions/whitepapers/msoft_addendum.html#c5829
http://www.mail-archive.com/debian-science@lists.debian.org/msg01416.html