A few days ago, I had the possibility to test Virtual Machine Manager 2007 on a physical computer not in a virtual environment. Although Windows Server 2008 is not a supported operating system for Virtual Machine Manager 2007, I decided to try it.
First time, I had no luck to make it start after a successful install. Mainly because I played around with some services and its’ log on as rights.

Second time it was ok. I will explain in detail what I installed and the install order.

• Installed Server 2008 Enterprise x64 operating system. Installed all available updates and added it to domain.
• In BIOS, enabled hardware virtualization and hardware data execution protection and then installed Hyper-V role using domain admin credentials.
• Installed 64 bit of Virtual Server 2005 R2 SP1.
• Installed Virtual Machine Manager 2007 prerequisites (.NET 3.0, WinRM, BITS, Windows Internal Database, PowerShell… don’t remember if it's all) from features menu, although there are some notes that tells you to install WinRM and PowerShell from certain web sites.
• Installed Virtual Machine Manager 2007 Server using default ports and settings. At this step I also installed SQL Server Express edition and let it use it’s default instance name.
• Installed Virtual Machine Manager 2007 Administrator Console on the same machine, also with default port and settings.
• From the Services window, changed the Log On as credential of the SQL Service instance to my domain admin username and password.
• Disabled UAC.

After this, I was able to start VMM Administrator Console.

Tip: after installing Hyper-V, I had problems with my remote desktop connection. I kept receiving the following error: “Because of an error in data encryption, this session will end. Please try connecting to remote computer again”. I could not resolve this issue until I have found one post on a forum: in Device Manager, expand Network adapters and open your NIC’s properties. Go to Advanced tab and look for something like “Large Send Offload (IPv4)” (this depend on your NIC), and set the value to Disable.