Uploading the Disk Image to Windows Azure

To upload image.

Open Windows Azure SDK Command Prompt as an administrator from Start -> All Programs -> Windows Azure SDK v1.x
At command prompt execute the following command

csupload Add-VMImage -Connection "SubscriptionId=<YOUR-SUBSCRIPTION-ID>; CertificateThumbprint=<YOUR-CERTIFICATE-THUMBPRINT>" -Description "Base image Windows Server 2008 R2" -LiteralPath "<PATH-TO-VHD-FILE>" -Name baseimage.vhd -Location <HOSTED-SERVICE-LOCATION>

Where

<YOUR-SUBSCRIPTION-ID> is your subscription Id
<YOUR-CERTIFICATE-THUMBPRINT> is the thumbprint of the certificate on the management portal.
Set the description as Base image Windows Server 2008 R2
<PATH-TO-VHD-FILE> is the full path of the .vhd file.
Set the name of the image as baseimage.vhd. So, that the name of the image on portal will be baseimage.vhd
<HOSTED-SERVICE-LOCATION> set the location where the hosted service will be deployed. The location can be “East Asia”, “North Central US”, “North Europe”, “South Central US”, “Southeast Asia”, “West Europe”.

In the Windows Azure VHD Verification Tool dialog, click OK to allow the VHD to be mounted.
Now it mounts the .vhd file and verifies it. In this process it generates a compressed file (.preped file) in the same folder as the original image file.
After that it creates a new blob for uploading the image file and starts uploading the compressed image to the azure account. It will take significant amount of time. After completion it shows the details.
Once the image is uploaded successfully it shows the status of the image as Committed.