You can easily adapt this method to an internal HDD install.
There are many reasons not to go for an install in a VM machine, the biggest of which are:
Hardware issues, like no PCMCIA support, some issues with built in cards.
Performance, some programs don't like being run in a VM.
There are more, but I think those are reason enough.


Of course this works with Backtrack also, and if you plan your cloning strategy right, you can practically eliminate the need for disaster recovery. Basically Vista is mostly a host, I have very little installed on it and instead remain in my VM XP machine most of the time I am forced to use Windows. the huge exception would Fruity Loops, which i run in vista because I have issues with the sound stuff over VM, and I gotta have my FL Studio! 
. Takes about 10minutes (from usb)