Quoting from Microsoft Technet:
Microsoft® Virtual Server 2005 enables use of virtual machines for sophisticated computing configurations like clustering. Clustering is valuable to businesses as it provides high availability for mission critical business applications and computing processes. Using virtual machines to cluster server computers has the added advantage of allowing a server to take advantage of its full computing power by running multiple virtual machines on a single hardware device, thus providing redundancy without requiring the quantity of computer hardware and associated cost that could be required for conventional clustering configurations. This guide provides step-by-step instructions for creating and configuring a typical, single quorum device, two-node server cluster. The configuration uses a shared disk on servers with Microsoft Windows Server™ 2003 Enterprise Edition installed in virtual machines on Microsoft Virtual Server 2005.
Go ahead and read it here.