I don't have to do this often but when I do I occasionally forget the steps.  For those wanting to create a new virtual disk in VPC, Windows Virtualization, etc here are some steps that may help:

1. Create a new virtual hard disk
2. Capture the setup disk ISO file
3. Start the VPC
4. On the screen, choose languages and such
5. Click on the repair link
6. Click on the command prompt link
7. At the command prompt type "diskpart"
8. At the diskpart prompt type "select disk 0"
9. Now type "clean"
10. Now type "select partition 1"
11. Now type "active"
12. Now type "format fs=ntfs", this formats to NTFS type
13. Now type "exit" to get out of the diskpart program
14. Now type "exit" at the command prompt to get back to system recovery options dialog
15. Now select restart button to startup the setup disk and your off and running!

It should be fully format and you should be able to boot onto setup disk and install now.

Enjoy