Link: http://msdn.microsoft.com/en-us/library/ee924680.aspx 

The following guest operating systems have been released on Windows Azure:

  • Windows Guest OS Family 2 which is substantially compatible with Windows Server 2008 R2
  • Windows Guest OS Family 1 which is substantially compatible with Windows Server 2008 SP2

The included link shows which guest operating system releases are compatible with which versions of the Windows Azure SDK.

Note:  To ensure that your service works as expected, you must deploy it to a release of the Windows Azure guest operating system that is compatible with the version of the Windows Azure SDK with which you developed it.

Link: http://msdn.microsoft.com/en-us/library/ee924680.aspx