My current running OS is Windows Server 2008 R2 SP1 on physical partition and a boot from VHD with Windows 7.
Found out blogs on the net which use this concept:
1. Boot machine with Windows Server 8 Developer Preview DVD
2. Bring out the 'Command Prompt'
3. Use 'Diskpart' to create and attach an empty VHD
4. Continue the installation of Windows Server 8
Below are the set of steps and commands you need:-
1. Insert 'Windows Developer Preview' to your DVD-Rom. If you have not had a copy go here to download a copy.
2. Boot your computer with the 'Windows Developer Preview' DVD.
3. At the first Setup page, press 'Shift + F10' to bring out 'Command Prompt'
4. Type 'diskpart'
5. Type 'list disk'. This guide assume your computer has 1 hard drive, so the expected result is you get 'Disk 0' listed.
6. Type 'select disk 0'
7. Type 'list volume'. you should see all your existing partition on the hard drive with 'Drive Letter'.
8. Type 'create vdisk file=<drive:>\windows8.vhd maximum 80000 type expandable'. Replace <drive:> with the drive letter where you want to store the VHD. This will create a VHD with size 80GB.
9. Type 'select vdisk file=<drive:>\windows8.vhd'.
10. Type 'attach vdisk'
11. Type 'exit'
12. Continue with the installation step.
13. You will see 'Disk1' during the disk and partition selection.
UPDATE:
22 January 2012
To install Hyper-V V3 role on Windows Server 8, you may use my guide at How-To: Install Hyper-V Role on Windows Server 8
