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For those that are having issues with this combination, including an error about “no drive suitable for Setup to store temporary files”, here’s what I did:

1. Create a new VM.
2. Create 2 hard drive images of 10GB.
3. Boot to Vista setup, and after you click the first “Install”, you can use Shift+F10 to get a console.
4. Run DiskPart and create/format a single large partition on each drive.
5. Exit and continue setup. Pick the first drive to install to, and you should be in business! (Note, you may need to reboot the setup once for the changes to “take”.)