I'm trying to use w32dsm to disassemble 3d studio viz 3i, viz.exe, and core.dll. but it keeps on running the program and looking fo rthe hardware lock. Am I using the right tool? I'm new and got interested in cracking this program. Do you have a step by step procedure in cracking the dongle?

It is generally better (IMO) to use IDA to crack/reverse dongle protected programs. IDA is a lot better at recognizing patterns and there are signature files that recognize the important functions of many types of dongles. I'd recommend you get IDA and then visit Zen's site (http://zencrack2.cjb.net) for more dongle information.