Hyper-V: Upgrade Windows Server 2008 Hyper-V to R2

There are 3 supported methods for upgrading or migrating a server with the Hyper-V role enabled (also called a host, or virtualization server) from Windows Server 2008 to Windows Server 2008 R2, as detailed in KB957256.

Method 1 of 3: In-Place Upgrade
Perform an in-place upgrade of the parent partition from Windows Server 2008 to Windows Server 2008 R2.

Note: During the upgrade, the compatibility report will inform you that you must remove the Hyper-V role by using Server Manager before you continue with the upgrade. This is not necessary. However, before continuing with the upgrade we suggest that you back up your virtual machines or export them using Hyper-V Manager. Additionally, consider the following before you upgrade:

Hyper-V must be at RTM (KB 950050) or later. If this requirement is not met, you will be blocked from continuing with the upgrade.
All virtual machines must be shut down prior to the upgrade. Saved states are not compatible between Windows Server 2008 and Windows Server 2008 R2. If the parent partition is upgraded with any virtual machines in a saved state, you must right-click the virtual machine, and then select Discard saved state to turn on the virtual machine.
Because online snapshot functionality uses saved states, Online snapshots are not fully compatible between Windows Server 2008 and Windows Server 2008 R2. Online snapshots are snapshots taken when a virtual machine was turned on. Offline snapshots are snapshots that are taken when a virtual machine was turned off. Offline snapshots are fully compatible with Windows Server 2008 R2. Virtual machines will start successfully to the online snapshot that was applied when the virtual machine was shut down before the upgrade. This is shown in Hyper-V Manager by the green arrow under the snapshot that points to Now.

To turn on the virtual machine with any other snapshot, follow these steps.

Note The following steps assume that you have to continue using all snapshots that are configured for the virtual machine. If you no longer require snapshots, you can delete your snapshots by using Hyper-V Manager, and then shut down the virtual machine for the data to merge with the parent virtual hard disk. For more information see the
Hyper-V Virtual Machine Snapshots: FAQ http://technet.microsoft.com/en-us/library/dd560637.aspx

Using Hyper-V Manager, right-click the snapshot that you want to apply, and then click Take Snapshot and Apply. This action will take a new snapshot from the currently applied snapshot. This new snapshot will now be compatible with Windows Server 2008 R2. We recommend that you rename the snapshot to reflect this. If you select this option, any changes that you may have made to the state of the virtual machine since the last start will be saved.
After the new R2 snapshot is taken, the snapshot that you selected in step 1 will be applied, and the virtual machine will go into a saved state. Right-click the virtual machine, and then click Delete saved state.
Turn on the virtual machine.
Take a new snapshot to capture the current state of the virtual machine to have a Windows Server 2008 R2-compatible snapshot.
Repeat these steps for each snapshot from Windows Server 2008. Once you have completed these steps on all required snapshots, delete the snapshots that were created on Windows Server 2008, and then shut down the virtual machine to allow the merge process to begin.

After the upgrade, update the Integration Services. To do this, open the Virtual Machine Connection window, and then click Insert Integration Services Setup Disk on the Action menu.

Note On a Windows Server 2008 R2-based computer, the integration services for Windows Vista and Windows Server 2008 will be listed in Programs and Features as "KB955484."