Outline for SharePoint 2007 Development Environment

With less than a year of SharePoint experience, below is a sketch of the steps I've been taking to build a SharePoint developer desktop environment. I'm sure I will be fine-tuning this. For example, I am not using Disk Differencing which would probably make things easier by using the same base OS image to start...

1. Create a virtual machine (I use MS Virtual PC 2007).
2. Install Windows Server 2003 R2 Enterprise. I'm not certain what the optimal version of Windows 2003 is so a just use the sledgehammer approach).
3. Install IIS (include SMTP).
4. Apply OS patches.
5. Install Visual Studio 2008 Professional.
6. Apply any patches and/or Service Packs.

By installing as a standalone no network accounts are required.

I would also like to install SQL Server 2005 in there somewhere (my guess is this will have to be before SharePoint is installed) but I'm not certain of a few configuration elements yet.

Tony Zink has a number of posts that describe at length how to create a VPC development and demo image at http://www.pptspaces.com/sharepointreporterblog/lists/posts/post.aspx?ID=28. Someone also posted a comment about a VHD Resizer tool that looked handy.

Update (4/8/2009): My wife also has a thorough guide for installing SharePoint on a VPC here.