Within Windows took a closer look at the Windows XP Mode in Windows 7. Windows XP Mode will be installable on three Windows 7 SKUs: Professional, Enterprise, and Ultimate. More specifically, the license policy VirtualXP-licensing-Enabled is only installed and present in these SKUs, of which XPM checks upon use.

In the Start Menu, you'll see three items: A special folder containing pointers to installed virtual machines, a folder of auto-published shortcuts (more on this later) to installed applications within the virtual environment, and finally a shortcut that fires up the VPC instance of Windows XP.

As I'm currently using older bits, you'll still see reference to Virtual Windows XP in these shots. This may change when the public beta becomes available.

First use message. You won't see this again, thankfully.After a fresh install, and first invocation of XPM by clicking the Virtual Windows XP shortcut in the Start Menu, VPC will configure the virtual machine for use. This process isn't exactly speedy but Virtual PC provides a real time status as to what's going on.

VPC first boots Windows XP. XPM then communicates with Windows XP and automatically (and silently) walks through the painful OOBE process, individualizing the virtual machine with details providing during install (e.g. username, computer name). Finally, XPM bootstraps the Windows XP install with various drivers and components necessary for XPM to work smoothly. For those familiar with VPC or VMware, this step is similar to installing the “integration components” or “tools” package included with the virtualization suite.

After all is said and done, you'll be presented with a rather boring virtual machine view. It is here you'll install your applications. Applications that install a shortcut to the All Users Start Menu will have their shortcut automatically published to the host machine within the Virtual Windows XP Applications folder (see above figure). For less well-behaved applications (or inbox applications like Internet Explorer 6), you can simply create a shortcut manually and it will (eventually) appear in the host Windows 7 environment.