When you install either Windows 7 or Windows Server 2008 R2 onto a un-partitioned hard drive it will create a 100Mb partition that does not have a drive letter. This 100Mb partition is mainly there in case you are going to use the Bitlocker feature however Windows also puts its boot loader on this partition meaning you cant just delete it.
 
I found that after creating a 2008 R2 server on VMWare I was unable to  back up the server using VCB because of this partition, I believe VMWare expects the operation system to be the first partition. Once the partition was removed VCB worked as normal
 
I was getting messages such as the below when tring to mount the server using VCB.
 
[2010-06-10 17:12:05.872 'vcbMounter' 7600 error] Error: Cannot query guest OS information. The mount directory path is invalid.
[2010-06-10 17:12:05.872 'vcbMounter' 7600 error] An error occurred, cleaning up...
 
You may also want to remove this partition to have a single clean partition to make imaging a client machine easier.
 
If you can it is  best to stop Windows creating the partition during the install, however if you have already installed Windows and need to remove the System reserved partition for whatever reason the below steps shoukd do the trick.
 
I have done this several times and have not had any issues but I would say;
 
MAKE SURE YOU HAVE A BACKUP \ SNAPSHOT THERE IS THE POTENTIAL YOU MACHINE WILL NOT BOOT AFTER FOLLOWING THESE STEPS
 
1) Open a command prompt with administrator privileges (right click => run as administrator)
 
Type:
 
bcdboot c:\windows /s c:
 
You should get a message similar to:
 
Boot files successfully created.
 
2) Open the Disk Management GUI (you could use diskpart for scripts), locate the  C:\ partition right-click and select “Mark Partition as Active”, select yes to the “do you want to continue message”
 
3) Reboot to confirm that everything is ok.
 
4) In Disk Management you can now delete the 100Mb System Reserved partition by right clicking on it and selecting “Delete volume”
 
Optional
 
5) To re-claim the 100Mb you can use a partitioning tool such as partition magic or gparted