would dynamic disk of system partition affect server performance

[mla_]

I would like to know if installation of system partition on dynamic disk will affect the machine performance?

[Walfordr]

Are you talking about windows dynamic disk vs basic or refering to VMware thin provisioned disk?

There is theoretically no performance loss when using Windows dynamic disks.  You may see gains running on hardware with multiple drives in a RAID configuration.  Its more for the flexibility and features like spanning volumes accross multiple disks.  You can grow dynamic volumes accross new drives.

Are you seeing poor perfomance?

If so provide details on the guest OS and Virtual Environment?

cheers,

Robert