

The upside to this is you can run multiple operating systems, and run applications designed for them natively.

VB then translates any hardware requests the guest operating system (Vista in this case) makes, and uses your PCs real hardware. This means that when it runs an operating system, it presents the operating system with a specific set of hardware devices that are different from the host machine. VirtualBox emulates a virtual computer inside of your computer. I don't quite know the process with VirtualBox, but thats something that can be found with google.

You could store this file on the partition you have for Vista, but the point is you can't use the installation you already have unless you convert it. VirtualBox requires you to create a virtual hard disk, which is just a really big file on your host machine. You can't use your existing Vista install unless you convert it into a virtual machine. It sounds to me like you don't quite understand what VirtualBox does.
