Windows 2008 HyperV Installation Part II
Creating Virtual Machines
To create a new virtual machine you need to decide firstly what hardware you need. How how much RAM, number and size of disks, number of network cards, etc. Once you have this info, load the Hyper-V Manager tool in Control Panel>Administrative tools from either a Vista or Windows 2008 machine. You’ll need to install these if you haven’t already.
From the Actions pane on the right side of the screen, click New and select Virtual Machine. Click Next and you should arrive at this screen

Enter a descriptive name for the virtual machine. Personally I like to keep the Virtual Machine names the same as the real machine names to avoid any confusion. Click Next
Specify the amount of RAM required by this virtual machine. This memory is effectively subtracted from the host machines memory. It’s a good idea to leave some memory in reserve for the host machine too, so for example if the host has 4Gb, maybe keep 512Mb for the host leaving you with 3.5 Gb for all the virtual machines. If you have more VMs maybe leave a little more for the host. Click Next.
Specify which network the virtual machine’s network card will be connected to – see the notes below on Virtual Networks if you don’t understand.

Now confirm the disk configuration. Personally I like to put all the VHD files (virtual hard disk) in suitably named folder like \VirtualMachines\Machinename but it’s just preference. It’s worth noting that the size of the file is not the size that you allocate here. The file starts small and grows as the virtual disk fills up.
Now confirm if you want to go ahead and install an operating system straight away and where you will be loading the media – you can use an ISO image file too which could be just mounted on a flash or passport drive on the host.

That’s it. Hit the Finish button and boot your new guest machine install.

Finally, when the operating system has been installed onto the guest, you should install the Hyper V extensions to the newly created virtual machine. From the Action menu, select Insert Integration Services Setup Disk. This makes support for video, mouse and keyboard much better. Note that not all guest operating systems are fully supported just yet so you might be stuck with keyboard only support for now.
Virtual Networks
There are 3 types of networks in Hyper-V – External, Internal and Private. Basically if you want to connect a guest machine to a real physical network it has to connect to an External Network. Internal allows communication only between guests and the host, and private only between guests. Because you may only have a limited number of network cards in the host, you need to create a virtual network (essentially an emulated Ethernet switch) in Hyper-V. When you create that network you choose which network adapter will be virtually “patched” into that switch. Now, when you create your guest machines and add virtual network adapters to them, you can choose which virtual network switch you will patch that adapter into. If an adapter is patched into an External virtual switch, it can see your real physical network.
Gotchas
Windows 2003 guest. The networking doesn’t work with the default network card when you first install the operating system. You have to add a legacy network card, then apply the service packs to bring it up to service pack 2, after which you can run the Integration Services Setup.
Windows 2003 guest. Integration Services Setup doesn’t work until you’ve installed Windows 2003 service pack 2. Consequently you might brush up on your keyboard shortcuts and enable remote desktop until you’ve done this bit or the HyperV Manager is all but useless.
Windows Vista as management machine. Make sure you’ve fully patched and the firewall on the server core has the management ports open – go to the Hyper V website http://www.microsoft.com/windowsserver2008/en/us/trial-software.aspx and follow the download links for the Vista patches.
Linux only has extensions available for Suse Enterprise Server 10 from Novell. Having said that if you get it working you're one up on me!
Finally
I hope you’ve found this useful, and it saves you some time. I’ve cut a lot of detail out to help you get the basic server up and running quickly, but it’s still worth reading through the documentation. Honest.
About the author
Paul Sheperia is a software developer and technology consultant, the founder of Applaud Web Solutions and one of the owners of the successful tutorial site wipeout44.com