Hi Damien,
First, the answer is no. You don't have to run Vista from the dvd drive. 
It can be installed or extracted on to your hard drive and run just like 
any prier version of Windows. In fact Vista Home Basic and Premier are 
setup to do this by default.
Second, keep in mind Microsoft has created several different versions of 
Windows Vista, and each is a little bit different, and comes with 
different applications depending on what you are buying it for. Here is 
a quick run down of the most common versions.

Windows Vista Home Basic. This version is comparable to XP Home edition. 
It is a very stripped down version of Vista, and comes with just the 
basics. Should be good enough for the average computer user.
Windows Vista Home Premiere. This version is like Home Basic above 
except it includes allot more multimedia applications and features. This 
is comparable to XP Media center.
Windows Vista Business. This version comes equip with server side 
applications, and apps sutible for small or large business and colleges. 
Is comparable to Windows XP Pro.
Finally, Windows Vista Ultament. This version has everything plus some 
extras not even available to Home or Business versions.  This is 
comparable to Windows XP Enterprise.
You should note all versions listed above come in 32 bit and 64 bit 
versions. They also come in retail boxed or OEM versions. If you do the 
math there is currently about 16 full versions of Vista, and several 
upgrade versions to upgrade XP to Vista. So there is lots of options to 
choose from if you are buying to update your system.
Personally, I chose the Vista Home Premiere as it was both in my price 
range, and it comes with some extra bells and wistles not available on 
Home Basic.




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