You'd better include some more info, like your PC, graphics card, OS.
Are you using XP?
I'm using XPx64 on core2duo 2.93 GHz with Radeon X1050 card, and I had a very similar problem with VMM crashing on generating modes from xml using GM 0.200 or vanilla MAME 0.200 or just plain mame0200.xml file. I reported the issue here, but nothing really happenned. However, I didn't/can't expect much because I'm using XP and nobody really wants to support XP anymore. I suspect that it is an incompatibility problem with xml generation/format in later versions of Mame (and therefore inherited by Groovymame too).
The only way I found to get around the issue was to use an older groovymame.exe (I used GM 0.179) to generate the mode list by xml.
BTW - there is nothing wrong with VMM creating 1000 or so modes, normally it will cull them back automatically, keeping the best ones