When you create a Microsoft Virtual Hard Drive either through Virtual PC or Virtual Server, you have to specify the maximum size of the file up front. While you can set the VHD to be a fixed or dynamically sized file, the total size the VHD is determined at the time you create it. Over time, however, you may want to increase the total size of the VHD file as requirements for the system change to allow more space for installed programs and data files.

Increasing the Size of the VHD File
With the help of the freely available VHD Resizer tool, you can expand the size of a VHD using it's simple wizard interface. When opening VHD Resizer the wizard prompts you for the source VHD file to resize.