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Lifehacker has a great article on creating smaller Windows installations for, among other reasons, more nimble VMs that are easy to move and maintain. Link: Trim Down Windows to the Bare Essentials.

There are a lot of reasons you might be interested in lightening up and streamlining a Windows installation. I happen to want a super-lightweight version of Windows to run on VMware Fusion on my Mac, so I can run my must-have Windows applications without allocating a lot of hard drive space or memory to the virtual machine. That means that the virtual machine will run more quickly and take up fewer resources on my Mac.

On the other hand, a lightweight Windows install is also perfect for older hardware that just can’t keep up with XP. In fact, your hardware doesn’t even have to be that bad to still enjoy benefits of this process. A slimmed down Windows install is also appealing for the performance gains it affords, because it allows your computer to allocate more memory and resources to individual programs rather than the operating system as a whole. …

Freeware Windows application nLite goes directly into your Windows installation disc and helps you selectively rip out all the features and software you don’t want. When you’re done (and you can be pretty ruthless), you’ll have a new Windows installation disc that you can use to install the lighter, gutted version of Windows.

They also talk about XPlite for your existing Windows install and GameXP, which runs some sort of performance voodoo.