Scott Hanselman has a great series of posts about how to enable booting from VHDs in Windows 7. As a PM at Microsoft, you often need to do demos of software in various stages of development. This can present a problem in terms of hardware as most PMs don’t want to manage and travel with multiple laptops.
If you want to the use one laptop, the traditional approach is to use Virtual PC to run a VHD. This works but performance (especially on a laptop) was an issue. You could definitely improve performance through various techniques but it can get complicated.
Windows 7 changes this dramatically as “Boot from VHD” is built directly into the OS. Not only do you get great performance but you also get access to the “hosting” file system. If you have any requirements around running beta software (or another OS) you should look at this feature.
Scott has some very easy to follow directions to get started:
This is the new standard on my PM team and I have been using it as well – check it out.