No, VHD is just using a file as virtual disk, everything else is native !
VirtualMachine is another story.
I have all Windows 8 installations on VHD - the overhead for disk access is pretty small.
Access to video, keyboard, mouse, USB, other disk partitions is native.
A VHD is a file but acts as a disk (you can have partitions inside just like on a normal physical disk).
The boot files are always on System Reserved or other "native" primary active partition.
The best solution is to put Windows 7 in C: and create a VHD on any physical partition.
Then install Win8 to VHD.
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If you can save your important user data to some external media,
then you could format your HDD and create new partitions.
I am still suspecting that there is something wrong with current disk partitions.
I would first create 3 primary partitions plus one extented (which can contain many logical partitions).
Put first OS - Windows 7 - on first partition (no need of System Reserved if you do not want to encrypt Windows 7).
Then you will have two free primary partitions and an extended where you can create many logical if needed.
Keep in mind that if you want a System Reserved 100MB (default size for Win7) is not enough - Windows 8 creates a System Reserved with default size 350 MB.
Microsoft has discovered that 100MB is not enough for System Reserved
