It is not happening anymore. The VM is only 18GB. It takes less than 10 minutes to capture and less than 10 minutes to update FOG. Or visa versa.
The only weird thing I have since noticed is during the install process, when are asked to go to fog/management and hit update database, that page no longer shows up. It just displays the fog login screen. So I just go back to the installer and hit ENTER. It seems to work fine.