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Volume Shadow Copy Service Space Allocation

I have a 500GB volume on our file server and I'd like to enable Volume Shadow Copies.  Does this mean you need to allocate at least 500GB, and more than likely 1TB, of space to keep at least one copy of everything?  Or can I allocate say, 300GB and just tell it to make copies of things that are changed rather than a full copy?  
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2003 allows you to set the amount of disk to use in Mb

see http://www.windowsnetworking.com/articles_tutorials/Windows-Server-2003-Volume-Shadow-Copy-Service.html for a tutorial.

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Thanks guys.  I am familiar with most of the settings, but just wasn't sure if there was kind of a "rule of thumb" when it came to how much disk to allocate.  Like 50% of the size of the volume you enable it for, or 150%, or whatever it may be.