Sparse Files are an important concept and the first time I saw that with SQL Server 2005 I was really excited. It is very NTFS specific and there are features of Database Snapshot and other SQL Server internal processes (DBCC CHECKDB) who use this concept behind the scenes. I saw a post from the Protocols team blog that talks about some of the errors you can encounter when working with Sparse files as outlined here. Other related posts on this topic are here and here.
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