We have made Linux to boot from a VHD file, will be released as open source soon. 1 Linux as Real Appliance
With VBoot for Linux, you can pre-install and pre-configure Linux OS and its applications, then distribute the resulting virtual disk file in VHD format. The vhd can boot a real computer, with configuration and apps instantly available. This way, operating systems are truly manageable, as simple as files. We call such a Linux VHD to be a real appliance, in the sense that it boots physical computers.
It's very easy to setup and boot a computer with a vhd file. You download the vhd file, drop it to Windows or Linux file system, then configure the boot loader, and reboot the computer. 2 Linux as Virtual Appliance
The exact same vhd file also runs as a virtual machine using virtualization software, such as VMLite Workstation, VirtualBox, Xen and Virtual PC and Hyper-V, etc. By default, it's optimized for VMLite Workstation.
If VMLite Workstation is installed, you can simply double click the ubuntu-910-desktop-i386.mop file to launch the vhd as a virtual machine with VMLite Workstation. 3 USB Boot Made Easy
You just need to store the vhd file to usb drive, then hook the USB to different computers to boot.
A sample Ubuntu VHD package is ready for download: http://www.vmlite.com/index.php/download/22-appliances
(free site registration required)
download, extract it, then double click setup.exe on Windows, reboot
On Linux, need to configure boot loaders.
detailed instructions: http://www.vmlite.com/appliances/ubuntu-910-readme.html