Windows 7's XP Mode (aka Virtual Windows XP) is one of the most misunderstood options available for Windows 7 Professional, Ultimate, and Enterprise editions. Go beyond the myths and get the FAQs you need to find out if XP Mode is right for you.
FAQs about XP Mode:
XP Mode combines Microsoft's newest desktop virtualization environment, Windows Virtual PC, with a VHD copy of Windows XP SP3.
XP Mode enables you to run Windows XP inside of Windows 7 in two ways: Desktop mode opens a resizable window or full-screen Windows XP virtual machine (VM) on the Windows 7 desktop, while Seamless mode runs individual Windows XP applications in their own individual Windows XP VMs from the Windows 7 start menu.
XP Mode can access USB storage, print, scan, and multifunction devices in either mode by attaching them to the Windows XP VM. When they are released, they can be used by the host Windows 7 desktop.
For the full details of my extensive Windows 7 XP Mode test drive, including more tips and tricks, see my Windows 7 Feature Focus article on XP Mode at MaximumPC.com.