The first step would be to create a raw image on Client1, this will represent the main HDD of the virtual machine, so make sure to give it as much space as you will need.
kvm-img create -f raw windowsserver.img 20G
OpenStack presents the disk using aVIRTIO interface while launching the instance. Hence the OS needs to have drivers for VIRTIO. By default, the Windows Server 2008 ISO does not have the drivers for VIRTIO. Download the virtual floppy drive containing VIRTIO drivers from the following location
http://alt.fedoraproject.org/pub/alt/virtio-win/latest/images/bin/
and attach it during the installation
Start the installation by running
sudo kvm -m 1024 -cdrom win2k8_dvd.iso -drive file=windowsserver.img,if=virtio,boot=on -fda virtio-win-1.1.16.vfd -boot d -nographic -vnc :0
When the installation prompts you to choose a hard disk device you won't see any devices available. Click on "Load drivers" at the bottom left and load the drivers from A:\i386\Win2008
After the Installation is over, boot into it once and install any additional applications you need to install and make any configuration changes you need to make. Also ensure that RDP is enabled as that would be the only way you can connect to a running instance of Windows. Windows firewall needs to be configured to allow incoming ICMP and RDP connections.
For OpenStack to allow incoming RDP Connections, use euca-authorize command to open up port 3389 as described in the chapter on "Security".
Shut-down the VM and upload the image to OpenStack
euca-bundle-image -i windowsserver.img
euca-upload-bundle -b mybucket -m /tmp/windowsserver.img.manifest.xml
euca-register mybucket/windowsserver.img.manifest.xml
