System and method to enable file level recovery of virtual disks and dynamic disks

Embodiments are described for enabling file level recovery (FLR) process for dynamic and VHD disks in a data storage system. For VHD disks, certain intelligence is provided to a FLR agent installed in a helper VM to discover the VHD disks in the source VM. The FLR agent detects the presence of the VHD disk in the source VM, and upon detection, performs an Instant Recover (IR) operation of the source VM. It mounts the VHD disk and contained VHD files in the source VM on the helper VM to expose the VHD files to the FLR operation, and a backup operation copies the exposed VHD files to a destination folder on a destination VM. The memory mapping to the VHD disk is maintained by the helper VM during the FLR operation.