What you Need:
Windows Home Server April CTP Server Installation ISO
Virtual PC 2007
Windows Vista (XP should work the same)
Daemon Tools
35GB Free Space

Lets go..

Firstly,Install Daemon Tools - Reboot and mount your WHS image. Make a note of the drive letter its mounted to.

Next, ensure you have at least 35GB free space, and open Virtual PC 2007. From there, create a new Virtual Machine. Call it Windows Home Server and choose a virtualmachine file location. Make sure you choose either dynamic or fixed disc(of at least 35GB). I would recommend dynamic, ie it grows with your needs in case you need more storage as you cant edit a fixed disc.

Open up Virtual PC, and start the Windows Home Server Virtual Machine, at the top pick ‘CD’, and then click “use physical drive [Driver Letter]” which you found earlier.This will then boot from the image file and start the installation.

The WHS installer will then start, choose the virtual disk you just created and enter your serial number. Finally choose a name for your WHS(one the most requested features from beta 2 testing). The installer will then continue the installation and reboot at the end. Don’t be surprised when on first boot, you see the Windows Server 2003 boot screen. This is supposed normal.

The installation will then continue.

Finally, Enter all Information and Enjoy

Taken from Article at Thethirdeye.org

Does the new version still require 512MB of RAM?

Yes! The installer will not continue unless it detects more than 512mb.

Nice Guide. Thanks for that

Try a different blue, but other than that, its awesome!

a different blue? What do you mean?