This depends. Seriously. Nothing in virtualization changes the basic rules of disc layout. The Server hosting a intranet website for 5 people? Likely enough. THe server hosting a busy terabyte level database - attach a LOT more disc / SSD and map them directly to the VM.
Your SQL storage (HDD 7.2k 4TB in raid 1) is "pathetic" (as in: low in the world of larger SQL) and may or may not work - it totally depends on how small the server is.
But again, nothing stops you from attaching a lot more IOPS. I know a database server running in Hyper-V (with around 8 other low performance VM's on the same host) that has 48GB allocated RAM and about a dozen discs / SSD directly mapped to the VM from the underlying hardware. In a 2U rack case with 24 2.5" slots. It is easily possible.
From what I see already HDD may be a bottleneck here but heard when
researching net and forums that the massive RAM we have may eliminate it. Is
it really the case?
Well, let's start: " and RAM (128GB)" - that is NOT massive. Or it is. Depends on (a) how much of that the SQL VM gets and (b) how large the databases are. I have seen databases needing a lot more. I have seen databases living happy in 32gb memory.
That said, that will only help with QUERIES (read) that do NOT use tempdb (which may be written) and low transaction throughput (logfile writes). Whether it is enough for your sql server we can not answer. You have to measure that.´I have a SQ LServer here having 4x480gb ssd in a Raid 10 JUST for tempdb and 6 x 800gb SSD in 2 Raid 3 for data. And yes, it needs it - I often push around multi gigabyte datasets on that machine. Lives nicely in a VM (as I said, 48gb RAM allocated).
SOME things you can make to improove, though:
* Add some SSD
* Set up a storage pool on Hyper-V and attach the SSD as buffer.
Voila, a LOT of buffer for often used data and / or writes. assuming you use Hyper-V in a modern version (2012R2) as host. The beaty? 240gb ssd, 2 should already bring a lot.
Otherwise - really, we will need a ton more research and analysis to make a decent advice. SQL Server disc layout is still something that may be trivial (small server) or requires a lot of thought and planning (large server).