Service Pack 1 for Microsoft Virtual Server 2005 R2, actually in beta and expected for Q1 2007, will introduce the highly expected capability of backup running virtual machines without stopping and restarting them.
The update in fact provides a so-called Volume Shadow Service (VSS) Writer, offering a way to achieve the live backup, which can be used by backup products to seamless copy the virtual disk (.vhd) files of virtual machines.
But the capabilitiy will not be available for the native Windows backup product: NTBackup.
A Microsoft employee reported so in the beta support newsgroup.
No technical details were provided to justify this limitation.