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When you create a Virtual Box image you can choose to create a dynamic one, which will grow as needed so that even if your image is for 20GB, if you used only 4GB, only 4GB is taken from your hard disk.
If you copy a lot of stuff, and the remove it, is it possible to have the image shrink again? Maybe it requires defragmenting?
The image would have a Windows 7 NTFS.