Basic Vs Dynamic Disk

Basic Disk supported by all Windows Operating Systems.
Dynamic Disk supported by later version of windows including 2000, XP, 2003, etc.

Volume changes can be done on dynamic disk without reboot.
Any file system can be used for both the disks.
One can convert basic disk to dynamic. However, if you’ve converted the disk to dynamic, you cant revert to basic without first wiping and recreating the volume.

Basic disks contains primary partitions, extended partition and logical drives. Primary partition in Windows NT can support stripping and software RAID sets. However, in 2000, XP and 2003 dont support stripping and software RAID.

Dynamic Disks can create different type of volumes with dynamic disks.
Simple Volume -> Use space from single disk or hardware array volume.
Spanned Volume -> Non fault tolerant disk sets that use free space from multiple disk.
Striped Volume -> Non fault tolerant disk that stripe data across multiple disks.
Mirrored Volume -> Fault tolarent disk set that mirror data from one to another disk.
RAID 5 Volume -> Fault tolarent disk that stipes data across three or more disks including parity.