Can't install to virtual drive

What I've done:

1. Boot from Windows 7 DVD
2. Shift-F10 to command prompt
3. created the vdisk
4. selected the vdisk
5. attached the vdisk
6. exit back to install screens

When I select my vhd I get the normal message saying it cannot install but when I click the Next button, I get an error saying there isn't enough free space on the selected device but it shows the whole drive as free space. It won't let me continue with the install.

I've tried creating the partition from diskpart and it still doesn't work.

Any help is appreciated.

Any help on this? I think it's related to the 100mb reserved system partition.

I have already installed to one VHD but now I want to create another but I think the existing 100mb system partition is preventing me from creating a new vhd. The message is "unable to create new system partition or locate existing system partition..." and won't continue.

Any suggestions are welcome!

Thanks