UPDATE (09SEP2013): There’s a faster way.  See: https://github.com/maartenba/WindowsAzureDiskResizer

I got into a bit of a predicament where the C drive of the VM I created here started to fill up.  I needed to install some software that only gave me the option to install to the C drive.  The installer was telling me there wasn’t enough disk space.  Here’s what I did to increase the size of the OS disk of my Azure VM:

• Delete the VM
• Download the .vhd
• Resize the downloaded .vhd
• Delete the original .vhd from blob storage
• Upload the resized .vhd
• Recreate the VM
• Use diskpart to get access to the unallocated part of C

Delete the VM

Download the .vhd

Cloud Storage Studio is my favorite storage tool for Windows Azure.  If you’d prefer a free option, then my next favorite is Azure Storage Explorer.  Use one of these to download the .vhd file.  This part is going to require a local hard drive with lots of disk space.  You will need at least 2x the size of the original VHD + the size you want to grow it by.  A fast internet connection will be a big advantage here as well.

Resize the downloaded .vhd

You can use Hyper-V Manager to resize your .vhd file:

My challenge was that the PC with the disk space necessary to store the downloaded and expanded .vhd wasn’t Hyper-V capable.  Therefore, I used a tool called VHD Resizer from here.  There is a nice walkthrough of how to use it here.

Delete the original .vhd from blob storage

Upload the resized .vhd

You need to upload the resized .vhd back to blob storage.  I figured out how to upload it correctly after reviewing Step 5 from the Creating and Uploading a Virtual Hard Disk that Contains the Windows Server Operating System instructions.  However, the command line switches for csupload.exe need to look like this:

csupload Add-Disk –Destination “<full blob url you want for your vhd>” –Label “<whatever you want>” –LiteralPath “<path to resized .vhd>” –OS Windows

Recreate the VM

I created a new VM via the management portal and pointed it to the .vhd file I uploaded with csupload.  In my case, I had to re-attach an additional .vhd drive since my original .vhd was configured with an F drive where my database files were stored.  Once your VM boots up, log in using Remote Desktop.  For me, all of my SQL Server 2012 databases were in a recovering state.  Not sure why.  After I rebooted my server, everything was fine. 

Use diskpart to get access to the unallocated part of C

Your C drive will still report the old size in Windows Explorer.  You need to claim the additional unallocated space in the expanded drive.  To do this, open a command prompt and execute the following series of commands in italics:

diskpart

Next execute:

list disk

Make sure you select the os disk.  For me, it was disk 0:

select disk=0

Find the partition that needs extending:

list partition

Select the partition.  For me, it was partition 1:

select partition=1

Finally, extend the partition:

extend

Now, you have the additional space in the drive you need to install more stuff .

@devkeydet