There is only one file type that uses the .VFD extension:
Virtual Floppy Disk
Disk image file used by Microsoft Virtual PC, an emulation software for Windows operating systems; saves the data for a 1.44MB floppy disk in its raw format; enables a "virtual" disk to be mounted and recognized as if it were a physical disk.
Since floppy drives are not often included with new comptuer systems anymore, VFD files can be used as a substitute.
Updated: October 22, 2014