VBoot is a software which allows you to boot all version of Windows 2000, Windows XP, Vista, Windows 7, 2003 Server, 2008 Server and Linux 2.6 from a virtual disk file in VHD, VMDK, VDI and Raw format.
Using VBoot, you can install a new operating system to the virtual disk file from a disc or .iso file and then boot the computer using the generated virtual disk file. It functions as any other normally installed OS and allows you to install software and do other tasks.
Full instructions on how to install and use VBoot can be found here.
Download: VBoot