Dynamic Disks are an alternate disk structure introduced by Microsoft in the Windows 2000 and XP professional OSes. Dynamic volumes do not use the conventional partition table. They can have names rather than drive letters and can be distributed across multiple physical disks. They can share a disk with other dynamic volumes. The intent is to avoid some of the limitations of "basic" disks -- for example, only 26 drive letters, or the inability to alter "partition" sizes and locations while the drive is mounted. Microsoft seems to envision dynamic disks as primarily a server capability.

There are a number of limitations with dynamic disks. They can be used only with Windows 2000 or XP professional. Only one OS is allowed per dynamic volume and Dual booting of OSes that don't support dynamic disks from dynamic volumes is not possible. It is possible to convert a basic disk to a dynamic disk, but conversion back may be difficult or impossible. For example, NT fault tolerant volumes are supported on basic disks, but if the disk is converted to dynamic, it can not be converted back to basic. Dynamic disks are not supported on portable PCs.

See: http://www.windowsitpro.com/windows-client/windows-2000-disk-management

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