Using VHD allows you to quickly test the capabilities of the operating system without its physical Installation. Installation in a virtual machine.
Sometimes you need to test the OS on a physical machine from the VHD. At the moment I'm doing this with the help of a physical device Zalman VE300, VE400.
But it would be convenient to do it means of the OS itself, and your program.
Sorry for my English. I Russian. Used Google Translate.
2. Real booting
Windows vhd (xp, 7, 8) of course will work ok.
Linux will boot also in vhd, but only frugal install and no write ability in vhd (just work like you boot linux from iso).
Some linux distros work fine like: taz-chrome, lps, 4m, puppy, porteus etc.