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I have a Microsoft Virtual PC running Windows 2003. I intend to copy over the .vmc(Configuration file) and .vhd (Hard Disk file) to my Windows 7 laptop.

What do I need to do to run the Virtual PC in my Windows 7 laptop?

The whole Windows XP mode is not understandable to me and I quite honestly do not think that Windows XP mode will work here.

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If you install Virtual PC on your laptop, you are more or less good to go. Just copy the two files across...

Be aware that the Virtual PC console has "gone", and has been replaced by an even naffer Windows Explorer window.

You can install Windows 7 Virtual PC on versions other than the ones which support the XP Mode extensions to Virtual PC (at least, I have installed it on Windows 7 Home Premium), but Microsoft doesn't make it easy. If you go to the Virtual PC and XP Mode download page, you can enter a version that does allow one to download XP Mode, and download and install "Windows Virtual PC".

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In order to run Windows 7's Virtual PC, you'll need Professional, Enterprise or Ultimate. Home Premium won't work.

Virtual PC 2007 SP1 should work on Windows 7, but it's not "officially" supported.

VirtualBox is another option if this doesn't work for you, though I'm not familiar with the conversion process.

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Better to install the version of Virtual PC designed (and supported) on Win 7 from the XP Mode pages. Note however that running server editions of Windows on Virtual PC is not supported (but in practice it is). You'll also need to update the VM additions to get the latest integration. –  Richard Oct 5 '10 at 6:56
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