Ben Armstrong explains once and forever issues with Windows Network Load Balancing (NLB) and Microsoft Virtual Server 2005:
…Virtual Server / Virtual PC will not utilize any NLB capabilities on the host operating system. This is because Virtual Server / Virtual PC perform their network operations at a lower layer on the host network stack than NLB. Note – Virtual Server and Virtual PC will function correctly when NLB is present on the host – they will just not benefit from it.
Virtual Server / Virtual PC have some network optimizations that actually cause problems when running NLB systems inside of virtual machines. These optimizations are simply that if we see a network packet that is going from the host to a virtual machine, or from a virtual machine to another virtual machine, we will send the packet directly to that virtual machine – without sending a copy of it on to the physical network connection. Similarly if we see a network packet coming into the physical computer that is destined for the host operating system – we will not send it on to any of the virtual machines…
Read the whole article at source.