Native VHD Boot for Windows 7

With Windows 7 and Windows Server 2008 R2, you can configure a VHD(virtual hard disk) file and boot from it, without the need to repartition your existing drive.

i) Native boot means you can fully utilize all hardwares connected to the system.
ii) You cannot use BitLocker when booting from VHD.
iii) Hibernate is not supported when booting from VHD.
iv) Native boot supports all 3 types of VHD files : Fixed, Dynamic and Differencing Disk. Note: Should you not have enough physical storage space as compared to the size of the VHD file, you might get a BSOD.

Simplified instructions for booting from VHD.
1) Start Windows 7 DVD Installation.
2) Press Shift+F10 for the command prompt.
3) Type "diskpart"
4) Type "create vdisk file=Path\Filename.vhd type=fixed maximum=xxxxxx". eg. (create vdisk file=D:\Win7.vhd type=fixed maximum=100000)<-- 100000 Megabytes, type can be dynamic, fixed, etc...
5) Type "select vdisk file=Path\Filename.vhd" to select the created vhd.
6) Type "attach vdisk", and you should get a confirmation that it is attached.
7) Type "exit" and continue installation, and select the attached vhd drive as the installation drive.
8) Boot and it should work.

Alternatively, you can use the disk management tools to create a vhd in Windows 7 via the Windows 7 GUI should you require another vhd copy.

How to remove vhd file.
1) Run elevated command prompt and type "bcdedit /delete {guid} /cleanup"