Using Windows Virtual PC or XP Mode in Windows 7
If your PC is already loaded with Windows 7, you might be able to use the new version of Microsoft's virtualization application, renamed to Windows Virtual PC.
However, this requires a processor (CPU) with hardware virtualization support and it must be enabled in the system BIOS settings. You can check your PC by visiting a web page on Microsoft's site.
Windows Virtual PC includes updates to support the new Windows XP Mode of Windows 7. Plus it lets you use USB devices in the virtual machines, includes enhancements for sharing folders between the host and guest OS, and offers printer redirection.
If your computer supports virtualization, Windows Virtual PC and the Windows XP Mode may have been automatically installed with Windows 7. However, if you can't find these utilities on the Start Menu, you can easily download them from Microsoft.
If you want to use Windows XP on your Windows 7 PC, you don't have to create a virtual machine from scratch and manually install XP. The new Windows XP Mode is basically a virtual machine preconfigured with XP. Plus any applications you install in XP Mode will be added to the shortcuts on the Start Menu, where you can open them directly from Windows 7.
If you want to install a particular edition of XP, another Windows version, or a different OS, you can create a new virtual machine and install the OS.