In Part 1 we covered virtualization and introduced Virtual Server 2005.  In this next part we will discuss setting up Virtual Machines.

Once Virtual Server is installed, it is time to start adding Virtual Machines.  You first need to open up the Virtual Server Administration Website.  You can do this by clicking on the Start button and finding Microsoft Virtual Server -> Virtual Server Administration Website under Program Files or All Programs depending on your operating system.  Once you have the Administration Website open, click on Create under Virtual Machines in the left menu.

Choose a name for the Virtual Machine (VM).  This will also be the name of the .vmc file that is created.  By default, the file will be placed in a folder with the same name in the path that is specified in Server Properties -> Search paths.  If you would like to create it in a different location, you need to supply the full path when setting the name.  One thing to note is that the name can be changed at any time by editing the configuration of the VM and clicking on General properties.

Next you need to set the amount of memory that will be allocated to the VM.  Virtual Machines default to 128 MB, but you may want to make this a higher number depending on the operating system you are installing.  One thing to note is that the memory is "subtracted" from the host computer's physical memory.

You then need to attach a virtual disk.  You can use an existing virtual disk, but right now we will create a new virtual disk.  Virtual Server defaults to a 16 GB disk, but you can set your own size. You are also given a maximum virtual disk size, but in reality the largest size the virtual disk can be is 2 TB (2000 GB).  Note that the virtual disk will be created in the same directory as the .vmc file with the same name.  If you chose to create the virtual disk at the same time as creating the Virtual Machine, it will be a dynamically expanding virtual disk.  If you would like to create one of the other disk types, you need to create the virtual disk first and attach it in this location as an existing virtual disk.

This is a good time to mention the various disk types.  You can choose which disk type will best meet your needs. There are four virtual disk types: dynamically expanding, fixed size, differencing, and linked.

Dynamically expanding - The size of the virtual hard disk expands as data is written to it.  A dynamically expanding virtual disk can be converted to a fixed-size disk.

Fixed size - The size of the virtual hard disk is fixed at the size you specified when creating the disk.  A fixed size virtual disk can be converted to a dynamically expanding disk.

Differencing - A differencing virtual hard disk is a virtual hard disk that is associated with another virtual hard disk.  The differencing disk only stores a record of all the changes made to the associated disk.  The associated disk is not altered in any way.

Linked - The virtual hard disk is linked to a physical hard disk on the physical computer.  You can convert the physical hard disk to a fixed-size virtual hard disk or a dynamically expanding virtual hard disk.

Now you have the basic container configuration for a Virtual Machine.  In order for it to run, however, it needs an operating system installed.  My preference is to install an operating system by attaching an ISO to the CD drive of the Virtual Machine.  To do this, hover over the new Virtual Machine that you just created and select "Edit configuration" from the menu that pops up.  Scroll down to CD/DVD and click on that.  Select the Known image file's radio button and enter the full path to the ISO image of your installation CD; then select OK.  You can also insert the media into the physical drive and ensure that the CD/DVD for the Virtual Machine is using the host drive.

Now you can start the Virtual Machine. To do so, click on the thumbnail image of the screenshot in the Virtual Server Administration Website.  You can also hover over the name of the VM and select "Turn on" from the drop down menu.  It will start from the CD drive and go through Windows setup.  Once Windows setup is complete, it will boot into Windows.  If you have a DHCP server on your network, an IP address will be assigned to the network card of the VM.  If you do not have a DHCP server on your network, you will need to assign an IP address to the VM network card from the subnet of your network.

Once your network settings are complete, open Internet Explorer and verify that you can connect to the Internet.  As always, you should run Windows update to ensure that you have all the critical patches installed for the operating system.

The steps above are the foolproof way of setting the configuration information for a Virtual Machine.  The .vmc file that was created is actually nothing more than a standard XML file.  This means that you can open up the file and edit configuration information for the VM directly.  The Administration Website only allows you to perform certain functions when the VM is running.  With this in mind, you should only edit the .vmc file when the Virtual Machine is not running.

In Part 3 we will discuss the administration of Virtual Machines.  This will include optimizing the performance and compacting the virtual hard disks.