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Note that you can’t use upgrade option and also can’t change the location of Windows 7 installation during the setup since you are using virtual hard drive to install Windows 7.
You can also refer my “Windows 7 installation procedure” guide if you have doubts about the installation.
Don’t forget to read how to create bootable USB guides.
* You can also use this guide if you don’t have a 4GB USB stick.
If you have a 4 GB USB drive then try out my “Install Windows 7 using USB drive” for a quick installation. The file is automatically saved to the My Virtual Machines folder.
* We are not using either CD/DVD drive in this guide so you can even use this method to install this method for Netbooks. To do this, type Virtual PC in Vista Start menu search box and hit enter. Click on “New” option and click “Next” to continue. Select “Create a virtual machine” option from the available three options. To save it to a different location, use the “Browse” button. Select the operating system that you would like to install using Virtual PC from the drop down box.
There are two ways to install Windows 7/Vista without using A DVD or USB. I prefer this option as this lets you customize as you like. In this tutorial we choose “Other” since Windows 7 option is not available in VPC as of now . This will open a small window called “Virtual PC Console”.
The first one is using VPC (Virtual PC) and the second one is mounting an ISO file using free tools like Daemon tools or Virtual Clone Drive. After selecting the operating system, click “Next”. As you are installing Windows 7 you can’t use the default memory allocation which is just 128 MB. Click on “Start” button to start the actual process. Once you click Start button, you will see Windows Console and also you will see “Insert boot media and click ” message in few seconds.(Generally we use Windows DVD to boot and install Windows but here you can simply use the ISO file without burning it into DVD) . So click on CD and then select Capture ISO image and browse to the Windows 7 ISO file location and hit enter.
So after reading those mails I am starting this guide.