booting Windows 7 from a VHD file
 

Windows 7 and Server 2008 R2 supports booting directly from a VHD file, the same kind of files used for Virtual PC/Server and Hyper-V. This gives you the option to install and handle the installation directly in one simple file, while being able to boot and run the OS just as if it were installed in a regular harddisk.

http://it-experts.dk/blogs/rsj/archi...-vhd-file.aspx