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Avoid "branded" OEM licenses such as for HP and Dell etc. The cleanest way to get a license for your VMs is to buy one, perhaps second hand. If you have retired PCs that no longer need a license then it's quite possible you can re-use the disks that came with those PCs. Activating the VM will invalidate the PC, if it has an internet connection. Yes, you can image a working PC (Google for "P2V site:") but your Win7 license probably only allows one activation at a time. You obtain a Windows ISO by either downloading it from a Microsoft site (either from the shop, or one of their time limited IE test images), or image a CD/DVD that you already have a license for, using a tool such as ImgBurn.
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The ISO experience is simply a more pleasant one - quieter, faster, and immune to sector errors, plus you'll keep them all in a host folder so you don't need to hunt for them for future reinstalls. First, an ISO is a nice to have, but you can install directly from the CD/DVD if you prefer.
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