I knew that Virtual Server 2005 was running on top of Windows Server 2008 without any problem because I am using this as a demo machine. Yes I know it's kind of tricky to use a beta Operating System as demo environment but I he I believe in our software 🙂
Now according to Ben Armstrong's (Virtual PC Guy) blog you can install Virtual Server 2005 on top of a Server Core installation. Although this is not a supported role neither it is a supported configuration but it is tempting to use it onto my laptop. I'll give it a try and post my experiences onto this blog. Note that if you try to install this you need to uncheck the "Web Administration" tool.
Here are some screenshots from Ben's blog:
It's obvious that you should never run this in a production environment because we will have Windows Server Virtualization as part of the OS, so no need to install any additional Virtualization layer.