Windows Virtual PC (aka XP Mode)
When XP Mode was released, it insisted on hardware virtualisation being present on your CPU and enabled in the BIOS. Given that Windows Virtual PC was based on an improved Virtual PC 2007, which provided hardware virtualisation as a user selectable option, I did wonder why on earth Microsoft thought this was a good idea.
Not only do many people not have a CPU with hardware virtualisation support, some manufacturers don't provide a BIOS option to enable this setting, especially on laptops - yes Sony, Toshiba and Acer, I'm looking at you.
Dumb and dumber
This issue became a double whammy; not only was Microsoft a bit dumb on not supporting Windows Virtual PC without hardware virtualisation, your hardware manufacturer was also dumb in not supporting the option in the BIOS.
Microsoft update to Windows Virtual PC
Belatedly, Microsoft has seen the problem with this hardware virtualisation requirement and has now released a new version of Windows Virtual PC that works without hardware virtualisation. This is really good news for those with older (or limited) CPUs and rubbish BIOS firmware.
You can details of how to download the new versions of XP Mode here,
And there is also an explanation of why the hardware virtualisation requirement was in place for previous releases,