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I am running Windows Vista 32 bit Home Premium but will be upgrading to Windows Server 64 bit (as I have the supporting hardware). I have got a second hard drive installed which isn't holding anything yet.

To setup a VM, would I simply install Windows Server on the empty HD and then VMWare workstation to setup workstations?

Also, what are differencing disks? I keep hearing this in desktop virtualisation.

Thanks

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Not exactly...

You install Virtual Machine software such as Vmware Workstion, Sun Virtual Box or Microsoft Virtual PC.

When you setup a new virtual machine, it will give you the option to create all the hardware including hard drive.

Some software such as Vmware Workstation allows you to use a physical hard drive as the virtual hard drive - however this is no requirement and you can easily just use a file on an existing hard drive (for example, VMDK is to a hard drive - what an iso is to a cd rom).

The virtual machine is a completely emulated (well almost) environment that has its own BIOS, hardware and operating system. You would install Windows or whatever OS you want in the same way as you would on a physical machine (only you can mount ISO files to optical drives in order to save time).

For example, on your own machine, if you had no operating system, it may say "opearting system not found"... The VM would do exactly the same.

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You can keep your virtual OS files in your usb disk,or 2nd hdd and etc...no problem.the point is; you should show your virtual disk file to the virtualization software like vmware,ms virtual pc etc...

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