I am running windows 7 as my main environment, however i have a need to run Windows Server 2008 R2 64-bit as well. In addition my Windows 7 environment needs to run Bitlocker. Virtual PC does not support 64-bit operating systems.

The approach I took was to use the Boot to VHD feature of Windows 7 and run VHDs from a new partition on my main HD, (so bitlocker can still be enabled on my Windows 7 partition). I could have run traditional due boot from a partition, but in doing so would loose the benefits of easily being able to backup.

Steps to do this were:

1. Launch “Computer Management”
2. Select storage->disk management
3. Shrink the relevant drive to create space for the new partition
4. Right click unallocated space (from shrink) and create a “New Simple Volume”. Make sure the file system for this is set to NTFS (note that Bitlocker must not be applied to this volume).
5. Shut down windows and boot into Windows Server 2008 R2 DVD.
6. At “install now” click the “repair your computer” option, don’t select a installation and select the command prompt (alternatively press shift + F10).
7. At the command prompt run Diskpart
8. Run create vdisk file=”V:\server2008.vhd” type=”fixed” maximum=30000 (where V is the name of your partition).
9. Run select vdisk file=”V:\server2008.vhd”
10. Run attach vdisk 
11. Exit the console window and click x to close the dialog.
12. Run through the Server 2008 installed and install to the newly created vhd (which will show as a partition).
13. Once installed, you will now see the boot menu with both operating systems.

Note that when you want to delete / reattach VHDs use bcdedit as per http://thelazyadmin.com/blogs/thelazyadmin/archive/2009/01/12/windows-7-boot-from-vhd.aspx

Related links:

• http://www.hanselman.com/blog/LessVirtualMoreMachineWindows7AndTheMagicOfBootToVHD.aspx
• http://windows7news.com/2009/08/25/how-to-create-and-configure-a-vhd-in-windows-7/2/
• http://blog.frankovic.net/2009/05/boot-win-2008-r2-rc-from-vhd/