Backup Exec - VMware / Deduplication Best Practices

Sorry Craig but it is physical device (library/tape/USB disk) access from inside a VM that is not supported and as we do support the HotAdd transport which will ONLY work inside a VM we obviously do support a media server being inside a VM.

With regards to the OPs issue

Deduplication of VM's uses the CPU and RAM of the media server because the remote agent performing the work is the on the media server itself (Client Side Dedup does not apply to VMs) this can obviously have an effect on performance which being virtualized may make worse as you are potentailly sharing a very intensive activity with other VMs running on the same host

I am also concened by your description of the iSCSI solution as we have seen issues with cost effective (i.e cheap) iSCSI solutions having problems when used a a Deduplictaion target - admittedly the solutions I am thinking of were software based iSCSI running on a host operating system and a bespoke NAS that offers iSCSI should be more reliable. Basically whatever is used as deduplication storage needs to have fast and reliable read and write performance.