A. Each version of Windows Server comes with different virtual instance rights. Windows Server 2008 Standard includes one virtual instance license, Server 2008 Enterprise includes four virtual instance licenses, and Server 2008 Datacenter includes an unlimited number of virtual instance rights.
A client recently told me that it planned to buy two Server 2008 Enterprise edition products and cluster them. The customer wanted to know if, to meet performance-balancing requirements, they could run six virtual instances on one of the servers and only two on the other server. The answer is no. The virtual instance rights are not transferable. If you need to run more virtual instances than are provided with the Windows edition purchased, you need to either buy licenses for each virtual instance or use Server 2008 Datacenter edition, which has unlimited virtual instance rights.
You also need to consider the services you run within the virtual instances. Many Microsoft applications are licensed to a physical box. You can't simply move a virtual instance running SQL Server to another server. Microsoft licensing allows software licenses to be reassigned only once every 90 days. If you need to move the virtual instances more frequently, you need a license for each of the physical virtual servers. See http://download.microsoft.com/download/6/8/9/68964284-864d-4a6d-aed9-f2c1f8f23e14/virtualization_whitepaper.doc for more information.