We just finished migrating our biggest server to virtualization yet, we created a 2 TB iSCSI LUN and moved a 1.0 TB application server overnight with everything intact and after making some minor adjustments to the networking on the VM, it works flawlessly and with the default settings is quite a bit faster than the physical machine it came off of, all while using less than 25% of the available horsepower of the VM host machine (a 2U 8 core HP server with 32 GB RAM).
It's running on Hyper-V on Server 2008 R2 and we used Microsoft's Virtual Machine Manager (a part of Systems Center) to do the migration. Interestingly we couldn't do a 'live' migration so we did the migration option for shut down mode, all with only a minor notice about the aforementioned networking.
A couple of reminders, when virtualizing in the shut down mode, don't forget to note the old machine's local admin account and password and it might be wiser to build the VM without networking and add it once it's online. Only 2 more big old machines to go at this client's site and this was the hairiest of them!
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