I tried to do it all by myself without any tutorial, just used common sense and some forum thread to put info together. It turned out to be very easy!
So I will document here my steps, so you can do it yourself too.
What I found out is that vmware server was discontinued, instead it was changed to vwmare player. And vmware website was uber confusing, some places asking for money some places saying product for free. They also bugged me to register, and finally I decided to abandon them.
I thought about KVM briefly, but on ubuntu server documentation I read that KVM is useless if processor doesn't support virtualization, that it is slow in those cases.
My final choice was virtualbox 4.2.
First you need to add sources:
sudo vi /etc/apt/sources.list
Add somewhere in the sources:
deb http://download.virtualbox.org/virtualbox/debian precise contrib
sudo apt-key add oracle_vbox.asc
wget -q http://download.virtualbox.org/virtualbox/debian/oracle_vbox.asc -O- | sudo apt-key add -
sudo apt-get update
sudo apt-get install virtualbox-4.2
sudo apt-get install dkms
Add your root username to group vboxusers
sudo adduser administrator vboxusers
At this point you need to install extension pack, to be able to install windows XP remotely on headless server.
mkdir ~/tmp && cd ~/tmp
sudo VBoxManage extpack install *.vbox-extpack
The rest of instructions is about setting up virtual XP machine via terminal.
VBoxManage createvm --name "Windows XP" --ostype WindowsXP --register
VBoxManage modifyvm "Windows XP" --memory 512 --acpi on --boot1 dvd --nic1 nat
VBoxManage createhd --filename "WinXP.vdi" --size 10000
VBoxManage storagectl "Windows XP" --name "IDE Controller" --add ide --controller PIIX4
VBoxManage storageattach "Windows XP" --storagectl "IDE Controller" --port 0 --device 0 --type hdd --medium "WinXP.vdi"
VBoxManage storageattach "Windows XP" --storagectl "IDE Controller" --port 0 --device 1 --type dvddrive --medium /Downloads/Windows.XP.Professional.OEM.Original.Not.Cracked.iso
VBoxHeadless --startvm "Windows XP"
At this point you download your favorite program for handling remote viewing protocol. I'm on mac, so I got used to cord.
Run cord, and point it to: serverIP, use username and password of your account on ubuntu server. And click connect. You will be greeted with blue screen of XP installation.