Do you need Boot Camp to run Fusion? No! Can you use the Boot Camp partition Windows as a Virtual Machine? Yes Which should you choose? Have a look at the following to help you better understand: Choosing the Right Virtual Machine Settings.

Everything you install gets installed on the hard drive of your computer! If you install a native OS X application it gets installed on your hard drive under OS X.

If you create a native Fusion Virtual Machine is it created on your hard drive and cane be seen in OS X however the Virtual Machine is a collection of files that show as a single item in Finder and it is actually a Folder with an extension of .vmwarevm which makes it a Bundle Package and to understand more about that have a look at the Virtual Machine Files section of A Beginner's Guide to VMware Fusion.

One or more of those files that make up the Virtual Machine is a Virtual Hard Disk File and when you install something within the Guest OS it is written into the Virtual Hard Disk however technically your still writing to the computer's physical hard disk although with a file that represent the hard disk of the Virtual Machine.

With the Boot Camp partition by itself this is a volume on the computers hard drive and can contain the Windows OS and run separately and apart from OS X. You can however create a Virtual Machine around this Boot Camp partition and the set of file that are apart of the Boot Camp partition Virtual Machine like its virtual hard disk is more of a placeholder if you will and contains the metadata Fusion needs to access the actual physical volume of the computers hard drive and when you install something in the Boot Camp partition Virtual Machine it is being written directly to that volume of the physical hard drive and not into the virtual hard disk as in a normal or native Fusion Virtual Machine.

Yes I know that sounds complicated however there is a distinction between folders, files, virtual hard disk with are files and the actual physical hard drive of a computer and I'm trying to make sure you understand these differences.

As far as the Ableton Live 7 software it is available for both Mac and Windows OSes so if you want to run it under Windows I think it is better run directly from a native Boot Camp partition Windows vs a Boot Camp partition Virtual Machine although it should be able to be run from a Virtual Machine too.

Outlook 2007 can also be installed directly to the physical hard drive when installing it in a native Boot Camp partition Windows or a normal Fusion Virtual Machine of Windows.

Note: There are activation issues when running Office from the native Boot Camp partition Windows and then running it under a Virtual Machine of the Boot Camp partition. You need to search the Forum for post concerning these issues before you determine which way you want to go. VMware Tools will handle activation issues with the OS once activated under both modes however it does not handle Office activation issues at the present time.

Were you right in partitioning your HD (w/ boot camp) 50/50 I can't say yes or no to that as it is your requirements that need to determine that however I would imagine that if your going to use Ableton Live 7 then you want to have adequate space available as this type of software can take considerable space when manipulating files.

The "Read only" setting in the Virtual Machine Assistant is in reference to your Home Folder in OS X so read only is a good choice until you understand the pro/cons of read/write to the whole Home Folder. You may want to define a second (or change the target of the first) to just say your Documents Folder for read/write however this all can be changed at will after the fact.

Once you install Windows in the Boot Camp partition the second Hard Drive Icon on your Desktop will have a different Name. Mine say Vista because that is what I named the Volume when installing Vista on my Boot Camp partition.

Not sure I can explain however I'll say this...

Sorry for any confusion on the name of the Hard Disk icon on your Desktop as I think I remember mine originally being Named something other then Vista and I renamed it that.

On my OS X Desktop I have three hard drive icons, Macintosh HD which contains the originally installed Tiger OS, Leopard which contains the Leopard OS and Vista which is my Boot Camp partition containing the Vista OS. I used the Leopard DVD to do a non-destructive repartition of my HD in order to manually create a Boot Camp partition after I had originally used it to split the HD to run both Tiger and Leopard so I don't remember what the Boot Camp partition was originally named when I had set it up under Tiger using Beta Boot Camp and then wiping it out to install Leopard and then subsequently doing a Boot Camp partition again but because Boot Camp Assistant will not add a Boot Camp partition if the startup disk already had two or more non Boot Camp partitions I had to manually create my Boot Camp partition.

Bottom line is you can create a working Virtual Machine of the Boot Camp partition until you install the OS in the Boot Camp partition. Also when you run the Boot Camp partition as a Virtual Machine the Boot Camp partition Drive icon, regardless of it name, will disappear from the Desktop as it has to be unmounted from OS X in order for Fusion to have raw access to it.

I guess my question to you is if you go to Apple menu > System Preferences... Startup Disk how many choices do you have and what are they? You should have at least 3, one being Network Startup, another being Windows on {something} where {something} is the name of the Disk Volume and then Mac OS X, 10.5.x on Macintosh HD if you haven't changed the default name given to the OS X hard disk. Can you select the Windows on {something} and then reboot into Windows natively on the Boot Camp partition? If yes then you have a working Boot Camp partition install of Windows from which you can create a Virtual Machine of the Boot Camp partition.

Well I hope I'm leaving you less confused then you where from my last post!