When preparing a Boot to VHD image it is important to know the size of the partition which is setup inside the VHD file – you should make a note of this when you create the VHD image. The reason for this is because the VHD file will expand to the size of the partition INSIDE the VHD.
For Example:
If you do not have free space equal to the size of the partition inside the VHD image, you will get a blue screen telling you that you are out of hard drive space.