Resize the boot partition like patruns said or use a different card just for when booting to internal (the nice thing about having an SD port is you can pop them in and out). Unfortunately, that is one of the compromises of running CM7 on the SD card. If you have a large enough card though you should be able to make the boot partition a decent size for stock Nook use and still have a good size virtual SD for CM7 to use.
But be forewarned.... the slot is a little delicate. I would recommend a larger card to avoid swapping as the slot may very well fail eventually if you do it too much.