One question i have trouble finding answers to are "what directories does virtual server actually use?", and after much looking i seem to have found the answer!
Virtual server uses the default installation directory (obviously!) but also does a few other... 'interesting' things that arent exactly conventional.
For example, when you create a guest operating system, it creates a save state file which will always be the same size as your ram specified in the same directory as your configuraton file (.vmc) which can cause problems if your tight for hard disk space.
Another thing is it seems to save the actual host network files(.vnc) under rootdrive:\Documents and Settings\All Users\Documents\Shared Virtual Networks
rootdrive:\Documents and Settings\All Users\Application Data\Microsoft\Virtual Server is also another directory where crash logs, options, licensing etc is all kept.
There are too many files to just go over, and to be honest i am not aware what they all do, but they essentially are all under all users\app data\microsoft\ .
there is no way to change this part, either. yes there are custom places for your virtual machines to go, but no way of keeping this all together.
in summary, this structure is fine, but if something occurs where you need to start over, its nice to know where these files are so we can delete them.