My company is currently going through the SD7 installation. We were HEAT based moving to SD7. We encountered issue due to mixed signals if you can run SD7 in a VM environment. The final answer is YES you can and it is supported. The minimum amount of ram for the VM server is 16gb and we are running on Windows 2003 R2. We have run into some speed issues at first but a complete reinstall appears to eliminated this issue. Are you performing the install yourself?