One of the more interesting new tools that Windows 7 features is Windows XP Mode. Essentially, Windows XP Mode is a fully functional version of Windows XP that operates within Windows 7, much like how Parallels Desktop works on the Mac. By allowing users to seamlessly run Windows XP applications within Windows 7, application compatibility problems become virtually a thing of the past.
Unfortunately, not all Windows 7 users have access to Windows XP Mode since it is not available in Windows 7 Home Premium and other less costly versions. In this article however, we will walk you through the steps needed to install Windows XP Mode, regardless of Windows 7 version.
Step one: Visit Microsoft's Windows XP Mode download site. Select Windows 7 Professional as your operating system, 32bit or 64bit respectively, and select your language. If you select Windows Home Premium edition, the site will not allow you to download the required files.
If you receive the error "This update is not applicable to your computer." when trying to install Windows Virtual PC, you may have selected the wrong operating system in step one; try the other Windows 7 Professional option. If you receive the error "Unable to stat Windows Virtual PC because hardware-assissted virtualization is disabled", you can ignore that error for now since the Windows XP Mode update will resolve that issue.
Step three: Once the three files have been installed, you will need to restart your computer.
Step four: At this point, Windows XP Mode is installed, but it will fail to load on a Windows 7 Home Premium system if we try to access it from the Start Menu. To bypass this limitation, we will start by opening up Windows Explorer (the shortcut is Windows Key + e) and navigate to the Windows XP Mode home directory. On most computers this location will be: C:\Program Files\Windows XP Mode\
Step twelve: Click Start > All Programs > Windows Virtual PC > Windows Virtual PC. In the window that opens, click Create virtual machine from the toolbar.
Step thirteen: In the new Create a virtual machine window, enter any name for your Windows XP mode virtual machine and then click Next. Unless you wish to change how much memory your virtual machine will use, just click Next again.
Step fourteen: When at the Add a virtual hard disk step of the virtual machine setup, select Use an existing virtual hard disk and then click the Browse button. We want to locate and select the Windows XP Mode base.vhd file that we were modifying earlier, which is usually located in the C:\Program Files\Windows XP Mode\ folder. It is up to you if you wish to enable the undo disks option also. Click Create when done.
As a side note, it is important to realize that although Windows XP Mode is now installed, the Windows XP virtual machine will be without a valid license and will be subjected to a limited time grace period before requiring activation. While there are a slew of clever ways to bypass this activation problem, the easiest and most recommended way to truly avoid all these issues is to simply upgrade from Windows Home Premium to Windows Professional. Upgrading also entitles you to other added features, such as host-side Remote Desktop and increased maximum RAM support.