I've been playing around with Windows Virtual PC and Windows XP Mode (the most recent versions are still the RCs found here). I'm not sure when to expect the final versions of these programs since they didn't ship with Windows 7 Ultimate (at least not the RTM available to MSDN subscribers). Regardless the installation and running of the Windows Virtual PC is pretty effortless and I really like how quick the virtual machine is and how simple the layout is.
Only certain types of computers can run Windows Virtual PC. It uses direct hardware support for virtual machines which means your computer's BIOS must support hardware virtualization. My dell laptop does. My gateway 64 bit work computer does not. After you install Windows Virtual PC you will be required to reboot your computer.
You can launch Windows XP by going to Start > All Programs > Windows Virtual PC > Windows XP Mode, which will launch the virtual machine right away, or go to Your User\Virtual Machines and launch the virtual machine directly. If you decide to launch Windows Virtual PC you can either choose the start menu option or go to the Virtual Machines folder in Windows and you will notice the functions have been integrated into Windows Explorer for that folder. Kind of cool!
It's interesting to note how smart / tricky Microsoft is being with this "XP Mode" virtual machine. Essentially Microsoft has offered to "bundle" (I use that term loosely) a free virtual machine program (originally called Microsoft Virtual PC 2004 and then 2007) now called Windows Virtual PC for free in the Business and Ultimate versions of Windows. They also include a full working version of Windows XP which many business and power users have become accustom to. This increases the number of deployments for Windows Virtual PC, increases sales of Windows 7 Ultimate and Business and keeps a large number of deployments in place for Windows XP. Who wouldn't want a free version of Windows XP just in case something doesn't run correctly on Windows 7? I know I do!
It's also interesting to note that Windows Virtual PC isn't considered an application or program by Windows 7 standards. It's considered a feature. Which means in order to uninstall (remove) Windows Virtual PC, you have to:
1. Go into Programs and Features
2. Click the Turn Windows Features on or off button
3. Scroll down and remove Windows Virtual PC
It's much easier to remove the Windows XP Mode virtual machine, just go to Programs and Features and remove it like any other windows program.