I am preparing to take the EX300 exam soon and I wanted to setup an iSCSI target to test against. I found that FreeNAS can be setup as an iSCSI target and it works from within a virtual machine.
FreeNAS 8 | Storage For Open Source
The below link is to the guide I used to setup. Although the initial part of the guide is for VMware Workstation I was able to setup a machine in VMM by using the OS type UNIX and Version FreeBSD 8.x no other changes were needed when createing a new virtual machine.
Budget Laboratory: Part 2 - iSCSI Virtual SAN with FreeNAS 8 | Fix the Exchange!
I hope this will help others preparing for the EX300 exam.