My lease was up on July 31, 2007 - I signed a new lease - month to month - After signing the new lease, my landlord is requesting another security deposit. She still has my original security deposit. She wants to do an inspection of the premises and if there is something broken, she will deduct from my original security deposit. Can they do this. I am renting a house in the state of Virginia

That's very unusual. But then so is signing a month to month lease. When a lease expires it automatically goes to month to month unless a new lease is signed or one of the parties terminates it. So there should be no reason to sign a lease stating month to month.

There also should be no need for an inspection until you vacate. IF the rent was raised, additional funds for security might be asked for, but not a new deposit.

I have to wonder if we know the whole story. Possible reason for an additional security deposit: (1) Did the original lease include people other than yourself? If so, are they on the new lease? If you are staying and others are leaving, the landlord may feel you are at more risk of not paying and therefore need a larger security deposit. This would also account for her asking to do an inspection and taking the cost of damages out of the original security deposit. (2) Did your employment change within the past year? Again it comes down to whether she questions your ability to pay. (3) Did you pay your rent late during the past year?