Booting from VHD:
http://blogs.msdn.com/knom/archive/2009/04/07/windows-7-vhd-boot-setup-guideline.aspx
Referenced in there, but worth a separate mention, using USB stick for Win7 setup:
http://www.elmajdal.net/Win7/Installing_Windows_7_From_a_USB_Stick.aspx
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In the old days, Windows server 2003 and XP don't install with just a XCOPY command.
I was using USB stick to install virtually all Windows system with a technology called "USB disk mass production tool".
This kind of tool could flash an ISO file into your USB stick and turn it into a "USB CD/DVD rom". No kidding. Your Windows system will treat it exactly like a USB CD/DVD rom. This is fantastic.
After I have command such a tool for my USB stick, I dismounted all the DVD/CD ROM/RW from all my machines.
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