This blog entry describes the support in Windows 7 and Windows Server 2008 R2 for creating and managing Virtual Hard Disk (VHD) files as a native format, and booting a physical machine from a VHD file. Native VHD support helps our enterprise customers and developer community use a common image format and common tools to manage and deploy Windows images that run either in Hyper-V virtual machines or on physical machines.
The Microsoft Virtual Hard Disk file format (VHD) is a publicly available format specification that specifies a virtual hard disk encapsulated in a single file, capable of hosting native file systems and supporting standard disk operations. VHD files are used by Microsoft Windows Server 2008 Hyper-V, Microsoft Virtual Server and Microsoft Virtual PC for virtual disks connected to a virtual machine. VHDs are useful containers and the VHD file format is also used by Microsoft Data Protection Manager, Windows Server Backup as well as many other Microsoft and Non-Microsoft solutions. To create a VHD on Windows Server 2008, you install the Hyper-V Server role and use the Hyper-V Manager to create a VHD file, and then install a version of Windows onto a partition in the VHD.
Full Article – http://blogs.technet.com/virtualization/archive/2009/05/14/native-vhd-support-in-windows-7.aspx
