Even though this is true, this will not work with Windows 7 Home version. You will need Windows 7 Professional or Ultimate for this to work. The computer used in this demonstration is a Gateway that does support Hardware Virtualization, but for the sake of this demonstration, the new version was installed. This article will clearly detail the procedure to install XP mode in Windows 7. The PC used in this demonstration uses Windows 7 64-bit version.
The first step is to go to the Microsoft XP Mode website. There are three downloads that you will need to install. The third actually does not have to be installed if you are using SP1. The three downloads are Windows XP Mode, Windows Virtual PC and the Windows XP Mode Update. The links are found here:

http://www.microsoft.com/windows/virtual-pc/download.aspx
Click on this link and this page will open. Only part of the screen is shown:

You do not have to e-mail the instructions, but you may want to print them. The instructions are given in this article. Click on Step 2, Windows XP Mode and run the download. It will take a few minutes to complete. Double-click on the downloaded file and you will be prompted to run the program. Click Run. The setup will begin. Click Next to continue. The installation will commence.

It takes awhile, so be patient. Next, you will have to agree to the licensing terms by clicking “I Accept”.

The updates will be installed. It is possible that the update will not install and you will be shown a message to that effect. If this is the case, attempt the above steps a second time and it will probably work. After the installation is complete, you will have to restart your computer.

Once your computer restarts, the updates will be configured. Now go to Step 3, Windows Virtual PC. Start the download and again be patient. It takes about 8 minutes to complete. You will be prompted again for the License Agreement. Click Next to accept and start the installation.

Create your user credentials password. If you are the Administrator, use your Administrator password. Turn on Automatic Updates for XP in the Setup window. The setup will share drives on the computer with XP Mode. This makes file sharing easy. If you wish to modify this, click “How do I change drive sharing options?” Instructions are given. The following series of windows will present as the XP Windows Virtual PC is formatted:

Once this is complete, you can find the XP Mode in the Start menu. Select All Programs and scroll to Windows Virtual PC. Click on that and you will see Windows XP Mode. Now, click on that. You will see that it is loading settings. There you have it! A fully functional XP mode in Windows 7 is now available as needed. This is great to have if you need to use files or applications that are incompatible with Windows 7 but compatible with XP, which happens frequently for many users.

The reason for this is to give their users an option to use the Windows XP mode to run software that is not running on Windows 7. Windows XP Mode required a processor with hardware virtualization support when it was introduced which meant that some computer users were not able to make use of it.

Users can find out if their PC is supporting hardware virtualization by downloading Microsoft’s Hardware Assisted Virtualization Tool.

Microsoft announced that they had removed the hardware virtualization requirement of Windows XP Mode two days ago and that they would make a patch available so that ever Windows 7 user with the right edition could make use of Windows XP Mode in the operating system.

The patches have now been made available for 32-bit and 64-bit editions of Windows 7. Once installed they remove the requirement of hardware virtualization which gets rid of error messages like “Unable to start Windows Virtual PC because hardware-assisted virtualization is disabled” and “Cannot start Windows Virtual PC Host Process. Check the System event log for more details” which users experienced previously.

A genuine validation check is performed before the download becomes available.

Update for Windows 7 (KB977206)
Update for Windows 7 for x64-based Systems (KB977206)

Install this update to remove the prerequisites required to run Windows Virtual PC and XP mode

Have you been making use of the Windows XP Mode in Windows 7? If so how was your experience?

Running applications using Windows Virtual PC can be beneficial if the application – or hardware – is not compatible with Windows 7. Most Windows users will probably never come in the situation that they need to run the mode but those that do can download the required software to launch applications in the virtual environment with just one click in Windows 7.

Next to the software requirements are hardware requirements. The computer needs to be able to run Windows XP Mode. More specifically it needs to support Hardware-assisted virtualization (HAV) and the option needs to be enabled in the computer’s Bios.

Microsoft has released the Hardware-Assisted Virtualization Detection Tool to give the user exact information if Hardware-Assisted Virtualization is supported by the computer and if it is enabled in the Bios.

The program is compatible with all editions of Windows 7 as well as Windows Vista SP1 or SP2 and Windows XP SP3. The Hardware-Assisted Virtualization Detection Tool is a portable software program that will display the relevant information upon startup. It will either display that the cpu supports Hal and that it is enabled, that the cpu supports Hal but that it is not enabled in the Bios, that the cpu does not support Hal or that the operating system version is not compatible with the program. Information are provided for the second case.