I believe there is currently no way to reduce the size seen by the guest OS, see
So what can you do? My best advice for a newbie would be to
- back-up the files you need
- create a new virtual machine with a smaller disk
- copy the files back
- once you are sure that you have all the files you need on the new machine, delete the old machine and and its disk image
Alternatively, you could mount the old drive in the new machine, and from there copy back the files you need.
However, I would not advise doing this if you don't understand what you are doing. There are files that depend on the disk configuration, which would make the machine unusable if overwritten with bad configuration.
For example, the file /etc/fstab
uses so called UUIDs to identify disks, which will be different for your new drive.