Using Virtual PC 2007, if you attempt to install Virtual Machine Additions (VMAdditions.iso) on to a virtual Windows 7, the OS will crash and you will have to do a system restore. How to solve this?
The issue is solved by upgrading your copy of Virtual PC on the host computer to Virtual PC SP1. It can be found here:
Also, if you're running VPC on Server 2005, upgrading to Server 2005 RC2 SP1 works as well.