What are your conversion options in Microsoft Virtual Server? To assist in the conversion process, the Virtual Server 2005 Migration Toolkit (VSMT) helps automate the migration of physical computers to VMs. To use VSMT, you need an Automated Deployment Services (ADS) 1.0 controller running on Windows Server 2003, Enterprise Edition, as well as Virtual Server 2005. VSMT supports the migration of Windows 2003, Windows 2000 Server Service Pack 4 (SP4), and Windows NT 4.0 Server SP6.
Through the virtual disk management features of Virtual Server's Administration utility, you can create a copy of your physical disk for use as a virtual hard disk. This procedure is intended for data disks only. You can create a virtual hard disk linked to the physical data disk. One thing to note is that the linked virtual hard disk doesn't contain a copy of the contents of the physical disk. It only references the physical disk. To copy the disk contents to the virtual hard disk file, you'll need to convert the linked disk to a dynamically expanding virtual hard disk.
What about backup considerations? In the realm of Virtual Server, the important VM files are .vmc (VM configuration), .vhd (virtual hard disk), .vsv (VM saved state), and .vnc (virtual network configuration). To back up VM configuration and resource files, I recommend backing up only the .vmc, .vsv, and associated .vhd files for VMs that are turned off or in a saved state. Otherwise, most likely they'll be in an inconsistent state.