I tried doing it inside the Win7 VM using the disk management tools but that didn't work either.
Within windows, use diskpart from a command shell:
C:>diskpart
Microsoft DiskPart version 6.3.9600
Copyright (C) 1999-2013 Microsoft Corporation. On computer: TEST
DISKPART> rescan
Please wait while DiskPart scans your configuration...
DiskPart has finished scanning your configuration.
DISKPART> lis dis
Disk ### Status Size Free Dyn Gpt -------- ------------- ------- ------- --- --- Disk 0 Online 35 GB 3072 MB
DISKPART> lis vol
Volume ### Ltr Label Fs Type Size Status Info ---------- --- ----------- ----- ---------- ------- --------- -------- Volume 0 D DVD-ROM 0 B No Media Volume 1 C Windows NTFS Partition 31 GB Healthy System
DISKPART> sel vol 1
Volume 1 is the selected volume.
DISKPART> extend
DiskPart successfully extended the volume.
DISKPART> lis vol
Volume ### Ltr Label Fs Type Size Status Info ---------- --- ----------- ----- ---------- ------- --------- -------- Volume 0 D DVD-ROM 0 B No Media * Volume 1 C Windows NTFS Partition 34 GB Healthy System
DISKPART>