In windows 7 it is pretty simple to boot directly to a VHD, given that it also contains (or you are going to install) Windows 7 (or Vista/Server 2008).
This installation is made possible I believe by the fact that from Vista on, Microsoft is using WIM (Windows Imaging Format) for OS installation.
Is there a way to install XP to a VHD on Windows 7? Or is there a way to create a WIM image of the XP installer?
Some have claimed to be able to do it in different blog posts, but there are no explanations of how to achieve it.