This is covered in the Emulator Documentation.
The emulated SD Card image is single file which the Emulator reads to and writes from.
You can specify to create an SD Card when you create the Android Virtual Device (AVD) using the android
GUI (for example from within Eclipse by clicking the button):
Or you can create an SD Card using the mksdcard
command.
To use an SD Card image when you start your emulator pass the -sdcard
option to the emulator
command:
emulator -sdcard c:/path/to/my/sdcard
If you re using the android
GUI to start your Emulators you need to have specified the SD Card when you created your AVD.