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overview; iscsi works great when hosting a virtual machine, as it provides a high performance portable storage solution. However, when used for database or file servers, ISCSI should be linked direcly to the server. This ensures that no additional overhead is added from vmfs and more importantly, that the disk setting are contained with the internal server configuration.

Example;

1. A sql2005 database server that has an OS hosted by a vmware server.
1. Hosting the OS in vmware make the OS independent of a hardware failure, and incurrs a negligible performance impact from esx.
2. Storing the SQL files on the iscsi device ensures that even a software failure will have little impact on the database files, and allow quick recovery by mounting the datafiles on another sql server.
3. Furthermore, since snapshots or clones of the OS disk can be stored, the OS disk can be recovered quickly by mounting a saved version of the vmdk

to setup sharing between iscsi LUNS on ESX you have to create both a vmkernel and a service console on that particular subnet.  

step by step details can be found on vmware site and our internal database ( esx iscsi )