I have seen lots of instructions about booting from a VHD. A new Windows 7 feature (actually a feature of the new Windows bootloader that is part of Win 7 and Server 2008 R2).
This is a component of the native VHD support that is part of the latest release.
Anyway, on MSDN of all places I stumble upon some nicely written, easy to follow instructions of how to do this. (I find it when I am not looking for it – go figure).
My gratitude to Charlie Calvert for posting.