In-place upgrade of VM running 2008 R2
Solution 1:
They mean a machine that is set to boot from a VHD via the boot menu, not a VM that boot from a harddisk, that is in fact a VHD on disk on the Hypervisor. There is a subtility there.
For more information, Boot to a virtual hard disk: Add a VHDX or VHD to the boot menu