Using a VM system doesnt take much space. It is mainly the size of the OS plus some extra space for the apps you are going to install. But you have to remember that if you are going to install Win7 in a Virtual Machine you will have to meet the requirements first. Which is:
16 GB available hard disk space (32-bit) or 20 GB (64-bit)
So if you dont meet the requirements of the OS you want to install in a VM then it wont install at all.
As long as you are not trying to install Windows to it you will be fine. Windows only allows installs to Primary Partitions. It may work for the VM not sure off hand.