I have Visual Studio 2010 Professional as well as Expression Blend 4 loaded on my development machine already. Everything I read says to develop apps for the Windows 7 Phone, I need to download the vm_web.exe file which includes Visual Studio 2010 for the phone and the emulator as well as a stripped down version of Expression Blend. What I would like to do is not have to install this package and risk some sort of corruption by having both of these on my computer at one time if it will even let me but instead use my own VS2010 and Blend to develop the apps. What that means is I need a plugin of some kind and the emulator. I already checked my VS2010 and the Windows 7 Silverlight templates are not included.
Can I do this or do I have to set up a completely different VM and load this package on it to develop Windows 7 Phone apps?
You can install the WP7 dev tools just fine on a machine with VS2010. The installer will install the WP7 VS Express, and will also register the WP7 tools with VS2010, so you can develop WP7 apps with either of them. The two VS editions will work just fine side-by-side.
Same goes for Blend the two Blend editions will work just fine side-by-side. The only difference with VS is that the WP7 tools are not registered with the standard Blend4, so for WP7 apps you have to use the WP7 Blend. (Note: This is not going to be the final story, as far as I know)