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I want to demonstrate cloud computing on my personal computer. Is it possible to do by creating 3-4 instances of Vmware and try interconnecting them? As in couple of instance as server and the other two as client? I thought of maybe using Dummy Cloud. Any suggestions which would be the best method.

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Please define "cloud" - it means a million different things to a million different people. – Dan Jan 28 at 18:29
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Thats right, most of the "Clouds" today were simple hosting provider yesterday. Spmetimes I have the feeling that everyone that has a vmware sticker on a server is now a cloud provider. – Izac Jan 28 at 20:29
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With VMware Workstation you can run a virtual instance of ESX. So yes, its possiable. Basically, you'd create two VM's, both of which would be ESX. Then within the ESX VM's you would create virtual machines. So its a virtual machine within a virtual machine.

http://www.techrepublic.com/blog/networking/installing-esxi-5-on-vmware-workstation-8/4810

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