So we installed Windows 2008 and ran it as a VM. Since ESX 3.0 does not have the Windows 2008 option, it's possible to use the Windows Vista option when installing Win2K8. However, the VMWare tool in ESX 3.5 is designed more specifically for W2K8. We installed Windows 2008 as a member server on ESX 3.0 and it ran fine. We then proceed to promote Windows 2008 to a Domain Controller in our test environment and performance took a big hit, and when I say performance hit I mean no RDP session possible, at the VM Console it would take >20 minutes to login. The configuration for the VM was with 2 Procs and 2 GB of RAM so we thought that maybe 2008 needed more resources, we then bumped the config to 4 Procs and 4 GB. I was then able to log in but we have to force a power down from VMWare Infrastructure Client. So we thought that maybe it was ESX that needed to be upgrade. Our VMWare Engineer then upgraded the ESX host that 2008 was running on to 3.5, we installed the new VMWare tool on the same system. It ran alright (still kind of slow) for a about a week and required a power down every week or so. Thinking maybe it's because it was an upgrade from 2003 to 2008 we did a fresh install of 2008 on the new ESX 3.5. The same issue exists.

We suspect that when we promote a 2008 server to a Domain Controller some services requires direct hardware access? As far as I can tell, 2008 runs fine as a member server or an application server (yes we have Exchange 2007 running on Windows 2008 in a testing environment already) but as soon as we promote 2008 to a Domain Controller everything goes hay wired.

In case you're wondering if it's storage or disk limitation. We are using a high-performance storage solution and all our servers and applications are using the same solution with no problem, so we know that's not the case. IMHO, I think that VMWare and Microsoft just need to really work together to find out why 2008 lagged after getting promoted to a DC in a VM environment.