I successfully installed Windows XP Pro x86 in Windows 7 Pro Virtual Machine last night. I did this booting from the install CD in Windows Virtual Machine rather than just downloading the Windows XP Mode application from Microsoft's website.
However, I notice that the display resolution for my Virtual Machine is extremely small. My screen is a 27" HP monitor with 1920x1080 resolution (hope I got that right) and my Virtual Machine fully maximized only takes up about a quarter of the screen...maybe a bit more. It's way too small to be useful.
I've read that I can access the Virtual Machine through my Windows 7 Remote Desktop Connection in order to use the Virtual Machine in a full size screen, but IIRC, doesn't the Remote Desktop Connection require the Virtual Machine to have a static IP?