I love Virtual PC, and I use if for all of my development. I have a ton of VPC's just sucking up MAJOR disk space. I ran across and article from Andrew Connell, HOWTO: Use Virtual PC's Differencing Disks to your Advantage. I wish I would have known about that feature a few years ago...
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Disclaimer The opinions expressed herein are my own personal opinions and do not represent my employer's view in anyway.