I finished rebuilding my rack-mount system with a new MSI motherboard and i3 processor. I installed Windows Server 2008 R2 and spent the day installing the motherboard-specific drivers (audio, LAN and video) to support the H55 chipset. Next, I activated the Hyper V role—that’s when things went south. On reboot, the system screen was cut in half with the lower-half looking like it was transmitted from outer space. Not good. After repeated experiments (starting over several times) I determined that Hyper V works fine on the hardware but not with the H55 HD video drivers.
I contacted Microsoft Developer support (in India) and opened a case. So far (two days later), they have not offered a solution. I was able to determine that this problem has been around for awhile (at least since January of 2010—see Connect bug 527817) but MSDN support did not offer the hotfix (which I tried) as a solution. Apparently, the Virtual team at Microsoft does not see this as an issue. They suggest that we should be happy with VGA mode. Ah, no. I suggest they fix Hyper V. This (apparently) is not a problem with their competitors. Another in-depth post (same group) suggests I replace the i3 with an i7. Ah, that might be possible but looking back through the people reporting the problem, some were using an i7.
At this point I’m running VGA mode and hoping for a fix.