Hi,
Just posting this here in hopes of helping others. This may be old news to some,and the documentation has said this is possible since the 2.X series but I have never had any luck with it and others have asked about it in the past as well. With the latest 4.X build I was successful in loading a persistent file as described in the documentation from a Windows 8.1 NTFS partition. I included ntfs-3g in the live-build config package list and disabled hibernation in windows 8.1 which was causing kernel panic due to Windows protections built into Linux. I know this is a feature I have been wanting to have available for a long time and have seen others ask here about it in the past.
I guess the next steps are how to prevent fragmentation of the image file by windows and best file systems to use inside the image. I have been using ext4 to good effect here within ext4 based partitions and tested that extensively for years but if others have suggestions I am definitely open to trying them out. Not sure if there are other considerations involved....
Thanks,