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One of the cool new features that can be utilized in Windows 7 and Windows Server 2008 R2 is the ability to boot from a Virtual Hard Disk. 
My friend and co-worker Keith Combs has done a great video of how the process works. He even takes the process up a notch by dual booting the machine. He also has the documentation of the process he follows in the video included in his blog post. I would highly recommend viewing it. It runs less than 25 minutes and is without question the best information I have seen to date on the subject.
Thanks Keith!