>>I've made a dozen or so attempts to install Windows 7 on a virtual machine set up on my notebook running XP Pro. The documentation for Virtual PC 2007 SP1 indicates that XP is a supported host OS. I have tried "Vista" and "Other" for the guest OS on various trials since Windows 7 isn't one of the choices. The install always drops anchor when I get to the step "Expanding Files". On the two occasions where I have allowed it to run to completion, it has taken 7 1/2 hours for this step alone. The total time for the installation itself was 8 1/2 hours. Another 3 hours was required to install the Virtual Machine Additions. However, even after the lengthy wait, Windows 7 would not boot.
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>>I have tried to install on external drives and on local drives. When installing locally, the virtual HD needs to be located on drive D: since there isn't enough space on C:. The notebook has 3 GB RAM; I've allocated 1 GB to the virtual machine. The D:\ partition has 140 MB free. Drive C:\ has only 10 GB free. I have disabled security and anti-virus software but that doesn't seem to make any difference.
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>>Has anyone successfully done this? Is there some trick to it?
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>You might want to consider the free VirtualBox product, instead of Virtual PC.
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>http://www.virtualbox.org

Yes, this is what we're using with a great success.