Microsoft has released a new version of its free virtualization sotware with support for the latest Microsoft operating system updates. Virtual PC 2007 SP1 includes support for Windows Vista SP1 and Windows XP SP3 as host and guest operating systems. That means you can run the virtualization environment if you're using those operating systems, or if you want to emulate them. Microsoft also threw in Windows Server 2008 Standard for good measure.
Like its predecessor, Virtual PC 2007 SP1 does not officially support Windows XP Home Edition or Windows Vista Home Premium or Home Basic. But for the most part, it will run just fine on those operating systems. You will, however, get a warning message telling you that you're using an unsupported OS when you install the software.