virtualbox.org

Hi,


Storage on physical hard drive:
Please choose whether the new virtual hard drive file should grow as it is used (dynamically allocated) or if it should be created at its maximum size(fixed size)
A dynamically allocated hard drive will only use space on your physical hard drive as it fills up(up to a maximum fixed size), although it will not shrink again automatically when space on it is freed.

Thus, I would kindly like being enlightened which physical partition the space of virtual hard disk is discounted from, C, D. In other words, if I have a physical hard disk with two partitions C (299GB) and D(356GB). Thus, when I create a VM with a VHD with a space of 40Gb, then which physical partition will be decreased?

A virtual disk is just a file on a host drive, so it will obviously occupy space on that drive.

When Virtualbox shows you the box to name the new virtual hard drive, you also can pick the host drive and folder where you want to store it. Whatever host drive you pick in that box is the one the 40GB for the virtual disk will get used on.
btw, use vdi if possible, not vhd. There's a design flaw in vhd's that make them unstable.