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I wish to know If I am using 2 VM instance on the same setup and I wish to use heavy data flow between the VMs is there any possibility that I get the Timeout (let say I having one timer on the sending end which stops on getting the ack.)

I vague question is How network works in VM . I hope I am clear with the question.

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Networking is achieved through a virtual switch. Here's a full explanation about how VMWare does it: http://www.virtualizationadmin.com/articles-tutorials/vmware-esx-articles/installation-deployment/vmware-understanding-virtual-switch.html

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Well, the physical memory you have on that box is the limitation of how the data flow works, since transferring is done within the memory of the host OS.

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