TechNet ON: Build and Manage VMs in the Cloud
The process of building a VM for Windows Azure is similar to building any other VM. You start by building a base virtual hard drive (VHD) which contains the Windows Server 2008 R2 operating system.
Running virtual machines on Windows Azure combines the benefits of virtualization and cloud computing.
A hosted service in Windows Azure consists of an application that is designed to run in the hosted service and XML configuration files that define how the hosted service should run.
To create instances of a VM role, you must deploy a service model package to Windows Azure.
Here is a jumpstart to understanding what to consider when creating a custom server image that is uploaded to Windows Azure.
Expert Tips on VM Role Deployment with Windows Azure SDK 1.4
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Understand the VM Role
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Build and Manage VMs in the Cloud