his means a developer could easily use WPF and the full GPU processing power of a high end graphics card.  In another scenario, this technology makes it easy to setup and run Windows Server 2008 R2 with the Hyper-V role, thus supporting 64 bit virtualization workloads.

The Virtual Hard Disk (VHD) is the container for the installed operating system.  Because everything is inside a single file, there are a number of benefits that can be realized for data center server environments, as well as managed desktop environments.  The following article dives into the technical details of implementing two operating systems.  Both are installed in a VHD file and can easily be booted by selecting the preferred environment at power on.  This could easily be scripted and automated.

The Installation Foundation – Windows PE

The Windows Preinstallation Environment (WinPE) has been updated for Windows 7 and Windows Server 2008 R2.  One of those improvements is the ability to use a Virtual Hard Disk (VHD) file as the target for an installation of the operating system (OS).

This has some interesting implications.  Booting from a .VHD file that contains an entire OS seems rather magical.  I mean think about it.  You go to look at a hard drive and there’s a single file but Windows Server 2008 R2 is installed inside it.  This would certainly simplify the ability to boot your servers on a completely new environment with little effort.  This is going to turn change management on its ear.

The same is true for the desktop OS, Windows 7.  You can install Windows 7 inside a .VHD file.  Again, the OS is installed inside a single file and thus makes it rather easy to move or change out and bring up a completely different version of the environment.  This will make test environments for developers super easy to construct and test discrete sets of applications or components.

One thing that is not well known is how easy it is to create the initial .VHD file and install the operating system into it.  The supported and documented ways are geared towards very well defined support scenarios.  You can see the supported scenarios in the Windows Automated Installation Kit (WAIK).  Most people have been reluctant to take the time to learn this because it involves the use of imagex captures and applies.

Source: http://blogs.technet.com/keithcombs/archive/2009/05/22/dual-boot-from-vhd-using-windows-7-and-windows-server-2008-r2.aspx