vLite, the program you should now have downloaded, is a really fantastic tool that, simply put, allows you to make your Windows Vista install far smaller than usual. It's actually a front end to a freely available Windows tool designed for system integrators, but it simplifies the process drastically.
vLite works in two ways: first, it allows you to shrink the size of the install medium required, and secondly it allows you to remove Windows components you'll never use from the install, so they don't take up hard drive space for no reason. It is this second aspect that is particularly useful for netbook installs, because it means you can install Vista on, say, a 20GB Eee PC and still have a useable amount of storage left.
Using vLite is pretty simple, you download the program from the website, follow the (really rather good) installation instructions and get started. The first stage of creating your new, ‘lite', Vista install is to copy the contents of your Vista DVD to a folder on your hard drive. If you don't have a Service Pack 1 disc, then now is the time to make one because after shrinking Vista, you can't then install the service pack.
Depending on whether you're putting 32-bit or 64-bit (Atom can cope with both instruction sets) Vista on your netbook, you'll want to download the appropriate stand-alone installer from Microsoft. Then it's simply a case of choosing Slipstream from vLite's menu bar, pointing it at the service pack and waiting - for around two hours in my case.
Having done that, the shrinking process begins. vLite's Components screen allows you to select which Vista components (oddly enough) you want to remove from the install disc you're making. A bit of common sense is required here, as if you're not careful you could make your installation unusable. Playing safe, I stuck to removing things I knew I wouldn't need, such as Aero (Atom won't run it), additional languages (do I look like I speak Slovakian?) and Media Centre (I'll use VLC thanks, it offers more codec support as is only a few MB big).
Having removed everything you don't want, you can then set up a few additional options, such as pre-adding your License Key, computer name and so forth. All these things can be done during the install process itself, though, so it's up to you if you do it now or later. Having done that, hit Apply down on the bottom right, whereupon vLite will go through stripping out all of the components you told it to.
Last but not least, go to the ISO menu and save a new Vista disc as an ISO disc image file. This should be somewhere in the 1GB to 2GB region, depending on how thorough you were stripping components.