I've used the following loads of times and it works
vmkfstools -i /vmfs/volumes/datastore/RDSSVR/RDSSVR.vmdk -d thin /vmfs/volumes/RD1000/RDSSVR/RDSSVR.vmdk
That works on SAN or local disk.
Have you checked in the databrowser to see how much disk space the new vmdk takes?