As I mentioned in my previous post, there's still an issue with Vista installing on blank hard drives, including newly created VHDs.
If you try to install it on a totally blank (i.e. unpartitioned and unformatted) disk, you'll be told that Windows won't be able to install, and that you should check your BIOS settings to ensure that the drive was detected properly.
So how does one go about getting around this? Simple - partition and format the drive before you try to install Vista. There are a few ways to do this, but I think this one is pretty easy, and if you're installing Vista, you already have all the resources you need.
When booted to the Vista CD, don't click on the option to Install. Instead, click on the option to repair problems with startup. You'll be asked to select a Windows installation (the list will be blank - don't worry, just click next), and then to choose a tool to run. Run the Command Prompt.
From the Command Prompt, run DISKPART to set up the partitions on your disk. Once in DISKPART, run these commands:
SELECT DISK 0
CREATE PARTITION PRIMARY
Now, close the command prompt, and click Restart. When the system restarts, Vista will be able to recognize your disk, and you'll be able to install.