The reclaim zero space on VPC doesn't work as good as it should. In order for it to work, you've got to defrag the VPC image, then install and run a program to zero out all free clusters, then try to reclaim space.
Personally, I don't think its worth the time and effot. If you're OK with the amount of space the virtual drive takes up now, then don't bother, just reinstall.
Conversely, if you want to start from scratch, you can always create a new virtual drive and do a fresh install into that image. FYI - even on a fresh install, Windows will leave you with a pretty fragmented drive and you will still want to run a defrag when your install and updates are all complete.