windows 7 - Can I boot up into an existing virtual machine?

The situation: as a freelance developer, I need to work in a similar development environment to the other people on the project. Because the dev environment has so many dependencies and 3rd party product, the project leader has created a Windows 7 Virtual Machine containing all the necessary supporting software. I was working very happily on WinXP till now; to get this VM working, I had to buy a new HDD and install Windows 2008 Server, and run the VM under Hyper-V.

The pain: What I didn't realize before installing all this stuff is that Hyper-V partitions off your available RAM between the host OS and the VM. I have 4GB of RAM on my machine, which is just great for my needs... but when I have to slice it up into 2GB each for my Win2k8 host and the Win7 VM, the performance of both has taken a hideous turn for the worse. The dev environment on the VM is so slow that I am finding myself actually screaming in frustration. That's a sign if there ever was one, that something has to change.

Truthfully, I really don't need or want Win2k8 on my machine. The drivers for my printer and the sync software on my cellphone don't work on Win2k8. Internet Explorer comes up with all these annoying security messages that I can't work out how to disable. Someone told me they think there's some way to boot up into the Win7 VM such that it gets access to all my system resources, including all my USB ports, and other peripherals. If necessary, I have Win7 installation CD and can reformat my Win2k8 drive to use Win7.

Can it be done? If so, what is the path of least pain between what I have now and what I need?

The first answer was great, but an alternative would be to use NeoSmart's EasyBCD. The option to boot into a .vhd can be easily configured and will appear in your boot menu, allowing you to choose it anytime you restart.

Yes, you can do this with Windows 7 Ultimate or Enterprise. You can also do it with Server 2008 R2 (note the R2).

Here's what TechNet has...