Creating separate virtual machines for sensitive applications is the best solution for ensuring that these applications are isolated from others. This provides a secure, isolated environment that can be managed and monitored independently, minimizing the risk of cross-contamination or interference from less critical applications. Host-based firewalls are more about controlling traffic to and from a VM rather than isolating applications, network segmentation within the same VM does not provide true isolation for the applications, and implementing a virtual firewall does not guarantee isolated environments for different applications as it typically focuses on network traffic management.