Your system CPU will need to be able to support hardware virtualization.
An Intel processor uses Intel Virtualization Technology and an AMD processor would be AMD-V with their Virtualization capability.
One of the easiest tools I have found is SecurAble from the Gibson Research Company.
It doesn’t require installation and quickly tells you if your CPU is capable of Hardware Virtualization.
Look carefully in the BIOS because the setting is not always clearly labeled.
If your system doesn’t support Hardware Virtualization, unfortunately you won’t be able to run XP Mode.
Secondly, download and install Windows Virtual PC.
After installing this one a reboot will be required.
After you get back from the restart, go to the Start menu and press Windows Virtual PC.
Agree to the EULA and choose if you want automatic updates or not.
Just wait a few minutes while it sets up.
Now you are ready to start using XP Mode.
XP operates like it would on a stand alone machine.
you’re free to navigate through the OS the same way as you normally would.
The version of Windows is XP Professional SP3.
you’re able to easily send the Ctrl+Alt+Del command.
To completely turn off the machine the first time you will need to shut it down from this screen.
It will share drives that are connected to the Windows 7 machine to the XP VM.
In this example I installed the old school MusicMatch Player version 7.5 on the XP VM.
To initiate the apps in XP Mode you should probably close out of the VM first.
I tested this on a Windows 7 32-bit machine with 3GB of RAM and everything ran very smoothly.