Encrypting Vista with BitLocker in Virtual PC or Virtual Machine

Yes it is possible, just follow the instructions and it works, (nice ha)

1. Create a new virtual machine.
   
   Configure the virtual machine with the appropriate amount of memory and disk space for the Vista configuration that you want to use.
   Note - enabling BitLocker will cause a dynamically expanding virtual hard disk to grow to its maximum size - so make sure you choose a small enough virtual hard disk size / have enough space on your physical hard disk.
2. Create a new virtual floppy disk.
   From the Virtual PC Console select File and Virtual Disk Wizard.  Then select Create a new virtual disk, A virtual floppy disk and specify a file name and location for the new virtual floppy disk (leave it to be a 1.44 megabyte (high density) floppy).
3. Configure the BIOS boot options for the virtual machine.
   
   In order for BitLocker to work, the virtual machine needs to be configured to not try to boot off of a floppy disk.  You will need to start the new virtual machine and immediately press the ‘DEL’ key.  Once you see the BIOS configuration page, change to the Boot page and press enter on Boot Device Priority.  Select the Floppy Drive option and change it to Disabled.  Finally - press F10 to save changes and exit the BIOS.
4. Install Windows Vista.
   
   Next you will need to install Windows Vista Enterprise or Ultimate Edition (only these editions support BitLocker).  But there is one trick to be aware of: The partition that is used to actually boot the system cannot be encrypted.  So when you get to the Where do you want to install Windows? press Shift + F10.  This will open a command prompt where you will need to type in:
   diskpart
   select disk 0
   clean
   create partition primary size=1500
   assign letter=S
   active
   create partition primary
   assign letter=C
   exit
   format c: /y /q /fs:NTFS
   format s: /y /q /fs:NTFS
   exit
   Now click on Refresh then complete the installation of Windows Vista on the second partition (and install Virtual Machine Additions when you are done).
5. Attach the virtual floppy disk to the virtual machine.
   Open the Floppy menu and use Capture Floppy Disk Image to attach the virtual floppy disk created in step 2.
6. Setup BitLocker (configured to use the floppy disk for the security key).
   Run gpedit.msc and go to Local Computer Policy, Computer Configuration, Administrative Templates, Windows Components and then BitLocker Drive Encryption.  Double click on Control Panel Setup: Enable advanced startup options, select Enabled and make sure Allow BitLocker without a compatible TPM is checked.
   Once you have done this, open an administrative command prompt and run:
   cscript c:\Windows\System32\manage-bde.wsf -on C: -rp -sk A:
   Then reboot the virtual machine
   Note - you should take a copy of your rescue key - otherwise you will be in a lot of trouble if you lose the virtual floppy disk.
7. Confirm that BitLocker is enabled.
   
   After booting Windows, open the Control Panel, click on Security and then on BitLocker Drive Encryption.  This should tell you that C: is either encrypted, or currently being encrypted.

And there you have it - BitLocker is now enabled on your virtual machine.  If you have the virtual floppy disk attached - the virtual machine will boot.  If you do not have the virtual floppy disk attached - you will need to provide the security code generated by BitLocker in order to access Windows.

Have fun,

windows Vista SP1

Hello everyone,

Windows Vista SP1 offers new improvements, you can see some of them below and if you want more you are more than welcome to attend one of the open houses in Microsoft regarding Vista SP1 new features.

Enjoy, 

Security: New APIs for the Windows Security Center and kernel patch protection (x64), signing of RDP files, Multifactor authentication for Bitlocker (TPM + USB stick + PIN), Bitlocker can now encrypt volumes other than the system volume

Better reliability with respect to: New graphics cards and external laptop displays, for some printer drivers, sleep mode, printing in Terminal Services sessions, upgrade from Windows XP

Better performance with respect to: Copying and extracting files, resuming from hibernate mode, when domain-joined PCs are offline, Internet Explorer 7, battery life in laptops, logon experience in some cases, browsing network file shares

Administration: Improved network diagnosis tool, disk defragmentation can be restricted to certain volumes

Support of new standards: exFAT file system (for flash drives), Secure Digital (SD) Advanced Direct Memory Access (DMA) (improves transfer performance), network boot using EFI on x64 systems, Direct3D 10.1, Secure Socket Tunneling Protocol (SSTP)