So with the AVVI option for BE 12.5, VCB, and Win2k3 SP2 (which is the ONLY OS I believe VMware supports for VCB)
You install VCB on the Win2k3 server (easiest method)
BE12.5 is configured to know that itself or a remote host is the VCB host (done in the job setup properties)
If on a SAN (Preferred) you share the LUN on the SAN to the BE media server, configure your backup job, and BE does what it needs to do. It handles all it needs to do on the backend, calling the appropriate scripts, commnands, etc. It snaps the VMDK's, moves them to a snapshot staging area, and BE backs up the snaps, and deletes them when done.
If you are using NBD (network based disk), it's SLOOOOOOOW. VCB over the network uses the service console port which is crippled intentionally by Vmware. Speeds are something near 40-50MB/sec max.
Myself and many many others have detailed how to use and common setup errors to VCB. Search this forum for VCB for more info, and re-order your searches to find the most recent ones going back the last few months.
Since you are using 4.x and NOT 3.x which is what VCB was designed for, you should be using the new vSphere/vStorage API's. That is of course if you actually paid for ESX 4.x. Again, the minimum level of Vmware you would need is Essentials, and NOT ESXi.