The other day, Microsoft announced that they had done away with the hardware virtualization requirement to run Windows XP Mode. This update KB977206 is now available for download.
If you try to install Windows Virtual PC and Windows XP Mode on a computer with a processor that does not support hardware virtualization, you receive one of the following error messages:
Unable to start Windows Virtual PC because hardware-assisted virtualization is disabled
This error message indicates that the hardware-assisted virtualization (HAV) feature is not enabled on your computer.
Cannot start Windows Virtual PC Host Process. Check the System event log for more details
This error message indicates that your processor does not support the HAV feature.
The update KB977206 removes the prerequisites required to run Windows Virtual PC and XP mode, that is, a processor which supports hardware assisted virtualization (HAV) which is also enabled in the BIOS.