How to improve the performance of a Windows Server 2003 VM on HyperV?

My client has a windows server 2003 VM running on HyperV (Windows Server 2008 x64). Previously it has 4 vCPU assigned to it but it has very high latency which I found that Windows server 2003 can only have 1vCPU assigned to it as it is the limitation of HyperV.

Now after assigning 1vCPU and configure it to reserved 100% of the 1 vCPU, the users are complaining that it is slow in performance, there will be an hour glass sitting for 5-10minutes at times. It has 3GB of Memory. Usually only 1-2 users are logged on each time.

I don't see anything else I can do to increase the performance. Please see attached screenshot of the vCPU config. Any input would be greatly appreciated. Thank you. vCPU config settings
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Can you please ensure your server install on Windows Server 2008 R2 SP1
I would make sure that all of the hotfixes for hyper-v have been installed. There are many hotfixes for Hyper-V 2008 SP2, and there are performance related hotfixes and other issues for R2 and R2 SP1. Don't forget to upgrade the integration components in the VM after patching the host.

I don't remember having any problems running multiple vCPU for a Windows 2003 VM. Did you upgrade the integration components after upgrading to multiple vCPU?

Is the CPU busy in task manager? Maybe you system is slow because of disk IO problems. If you are running Windows 2008 (non R2) in the host, guests with dynamic VHDs will have performance issues. Hyper-V 2008 R2 fixed that problem.

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Svet PaperovIT ManagerCommented:
Make sure that you have SP2 installed on Windows Server 2003. Hyper-V supports up to 2 virtual processors for Windows Server 2003 SP2:
Svet PaperovIT ManagerCommented:
... although I am running VMs with Windows Server 2003 R2 SP2 with 4 virtual processors without any problem. However, I am not sure that all 4 cores are really used by the VMs. So, make sure to update the integration services and install all available updates on the Hyper-V server as the previous post suggested
thecavalryAuthor Commented:
Thanks guys!
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Windows Server 2008

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