The Volume image can be used with RAM Disks that have the "Hard Disk Emulation" option OFF. This will create a simple volume image.
The Hard Disk image can be used with RAM Disks that have the "Hard Disk Emulation" option ON. This will create an image with partitions required for hard disk emulation.
If you aren't planning to use hard disk emulation, choose the Volume image type.
Also, some info about Hard Disk Emulation:
It emulates a complete hard disk drive with partitions indistinguishable from a real device. This option is offered because some specialised applications or disk utilities may not work with a standalone volume - they can produce I/O errors or may be unable to access the volume. Those users who encounter such issues should turn the "hard disk emulation" setting on. The downside of the enabled emulation is that it is a bit slower than a standalone volume.