For all those out there who, like me, read Scott Hanselman’s blog and attempted to implement a “Boot to VHD” solution like Scott blogged about, here is a quick word of caution. I attempted this with my Windows 7 Professional install on the VHD, and was greeted by a “License error: booting from a VHD not supported on this system.”
Note: This error is only displayed after the full windows install completes. The problem is that only Windows 7 Ultimate, Enterprise and Windows Server 2008 R2 are supported operating systems that can be booted on the VHD. For more information, read the FAQ regarding Virtual Hard Disks in Windows 7.