I just able to get my hands on Windows Virtual PC for Windows 7. Can’t say Windows XP Mode is awesome but it works and it works better then any alternative on the market. Another free tool can be used to replace Windows Virtual PC is VirtualBox but of course VirtualBox can’t give you the slick usage Windows Virtual PC with Windows XP Mode installed. There is support for USB devices in native form so even if your device is not recognized by Windows 7 you can still use that device on Windows XP Mode. XP performance on Windows XP Mode is good, it is pretty much as fast as you can get by other virtualization software on the market. Also installed programs on Windows XP Mode appears on Windows 7 start menu so you can have a seamless integration for your old software. For newbies I recommend using Windows XP Mode as last solution because it will slow down both problematic running software and the entire system as a result of virtualization.

By the way maybe one of the most important things I observed while playing with Windows Virtual PC is it’s problems with linux. Do not try to install linux on Windows Virtual PC. I have tried installing Ubuntu, although live CD and installation worked fine i couldn’t started the installed system. I didn’t check the manuals about this (or the help files as Microsoft calls them) but what i was expecting is to at least seeing buggy working linux. On this phase you have great alternatives on market like VirtualBox which supports Windows and Linux OS as guest and host.

Update: Recently installed Windows XP on VirtualBox and when it comes to performance VirtualBox is far more better than any other alternative, again.