There’s an interesting entry on the TechNet blogs about how to further reduce the amount of disk required for running Server Core.
Server Core is tiny compared to a full installation of Windows Server 2008, sacrificing the GUI and .NET to reduce RAM & disk requirements as well as reducing the attack surface. It supports a number of roles whose install files are on the hard disk. You can uninstall those packages using the instructions on the linked blog entry.
This is a one-way deal. You cannot re-install those packages. To get them back you have to re-install the OS. You will no longer be able to install the functionality of the packages once you remove them.
Why would you consider this? If you’re installing Core, you’ve probably got a very set idea of what the server will do, e.g. it will be nothing but a file server, or a DC, or maybe even a Hyper-V host. In fact, a Hyper-V host is a perfect example. It should be nothing but a Hyper-V host. Uninstalling the other packages will guarantee that and you’ll have minimised how much disk the OS needs, thus freeing up space for VM’s … although it’s not going to all that much!