The idea of a simulation, as I understand it, would be closer to things like climate models. The computer is programmed with rules and in the case of reality simulation the rules would be the base laws of physics. Set some initial conditions and let it go. Cosmologists do this already to put constraints on theoretical models of galaxy formation, the idea of virtual reality is taking it further to model in the development of high order sentience. Particles, once instantiated, cluster under primary forces into larger groups to form atoms, molecules, planets, and so on; but all particles are slightly sentient and so minds occur as a temporary nexus of sentience. I don't see how this could mean that the entire simulation cold equate to a mind as evidence from our simulation (if that is what it is) is that minds form as a local temporary nexus of sentience just as planets form as a local temporary nexus of particles.
But we are still left with the problem that the program running the simulation would itself be a nexus of complexity in a simulation in some higher space according to this logic.