I have Virtual Server 2005 R2 installed on a notebook computer which is running Windows Server 2003. The guest OS is continuously running at 100% CPU, which makes it virtually unusable. However, the host OS is fine. Why is this happening?
This may be happening because of power management controls on your computer. This can happen not just on notebooks but on other machines that have third-party power management tools installed. Many notebooks feature some kind of power-management add-ons, such as advanced battery-life functions, which can interfere with the way Virtual Server handles CPU throttling. Try turning off all the power-management functions (or setting them to be disabled when the notebook is running off of AC current), and see if that helps.
Another recommended fix is to use an application called SpeedSwitch, a utility that allows the user to dynamically modify the frequencies of mobile Intel and AMD processors in Windows. You can disable power management functions through this application, or selectively enable them with great flexibility than you might with the more stock apps that are bundled with the computer.