As mentioned above, a quorum is simply a configuration database for MSCS, and is stored in the quorum log file. A standard quorum uses a quorum log file that is located on a disk hosted on a shared storage interconnect that is accessible by all members of the cluster.
Note: It is possible to configure Server clusters to use the local hard disk on a server to store the quorum, but this is only supported for testing and development purposes, and should not be used in a production environment. Each member connects to the shared storage through some type of interconnect (for example, SCSI or Fibre Channel), with the storage consisting of either external hard disks (usually configured as RAID disks), or a storage area network (SAN), where logical slices of the SAN are presented as physical disks.
Note: It is important that the quorum uses a physical disk resource, as opposed to a disk partition, as the entire physical disk resource is moved during failover.
Copyright Microsoft Corpporation – Windows 2003 Server Clusters: Quorum Options Document