I was sitting wondering the other day how I could squeeze more Virtual Machine performance on a test box I have and came across an article from RoudyBob http://roudybob.net/articles/927.aspx which was talking performance tips for Virtual Server 2005.

The suggestions were:

• Defrag the host whenever you have some idle time.  I reccomend either using the defrag tool included in Windows or purchasing somethign like PerfectDisk from Raxco Software.  Running virtual machines under VS2005 seems to cause quite the fragmentation on the host disk.  Especially if you're building and tearing down virtual machines quite often.
• Configure the host operating system (Windows Server 2003 if you're following the rules) for “Best Performance“ under Performance Settings in the System Properties and also make sure that the server is configured to give priority to “Background Services“.  Right-click “My Computer“, click Properties.  Click Advanced tab.  Select “Settings“ under “Performance“.
• You're probably running anti-virus software on the host.  Good idea.  However, you might want to have it exclude the Virtual Server services if you can - VSSRVC.EXE and VMH.EXE.
• Do whatever you can to make the disks in the host “faster“ - faster RPM drives would be a good start.  10K RPM drives are relatively cheap these days. 
• Run your VHD files (virtual machines) from a different physical disk than the host OS.  Either use an external disk or a seperate internal disk - if you can afford RAID, do that as well.  RAID 0 will help when writing large files.  RAID 5 will also improve performance especially on READ operations.  RAID 1+0 will be the best of both worlds.
• RAM...RAM...RAM.  The more the better.  I run 2GB in my “sandbox“ and still hit the limit.
• Disable Hyperthreading if the host has support for it.  I blogged about this here.

I found I has addressed most of these, but thought you might like to know. Full credit to RoudyBob.

Enjoy!