Windows 7 Beta and Windows Server 2008 R2 Beta support booting into the OS via a VHD file attached to Virtual PC/Server or Hyper-V.

The first step is to create the virtual hard disk (VHD) of Windows 7 Beta. Right-Click on “Computer” and select “Manage.” From there expand “Storage” and right-click on “Disk Management” and select “Create VHD.” The following dialog box will appear:

You can also use the command prompt to create the VHD file.

Once you have created the VHD file, boot your machine with the Windows 7 DVD in the dvd drive and choose “Install Now,” then press SHIFT+F10 to get the command prompt. Type the following:

When you return to the installation procedure, you will see a 20GB partition, select this. It will warn that you cannot boot from it – disregard this message – you can! Continue the install.

When you boot up, it will make Windows 7 the default boot option. You can change this using bcdedit.

This is great for installing multiple copies of Windows 7 or Windows Server 2008 R2 on a machine or storage area network without creating multiple partitions. The VHD files are then portable and able to be used on other servers and machines using Hyper-V or Virtual PC/Server.