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In the current Virtual PC when you click on an app in VPC, you have to click twice: once to get the focus on the Virtual PC window and again to click on a program in the VPC guest.

Does it work the same way in Windows XP Mode in Win 7?

Windows XP Mode. Formerly called Virtual Windows XP (VXP), this solution provides users with the ability to run many older Windows XP applications in a virtual Windows XP environment, side-by-side with native Windows 7 applications.

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No. Windows XP mode runs in "seamless" mode. The application shows up in the taskbar just like any other program, allowing you to easily switch back and forth.

There's an excellent video at TechRepublic showing Excel 2003 on the VPC and Excel 2007 on the host running side-by-side.

From the Washington Post (weird place to get tech details, but they're right!):

Where XP Mode really shines is with Seamless Mode, which lets you launch XP apps straight from your Windows 7 menus. To use Seamless Mode, you first install an app under Desktop Mode, then log out of and close the virtual machine. The app you just installed can then be found on the host PC's Start menu under All Programs, Windows Virtual PC, Windows XP Mode Applications.

When the app is launched from the host OS, XP launches in the background and the app appears as if it were running natively in Windows 7. Apps run this way are called virtual applications. If you don't find the default start menu location to be convenient, you can move the shortcut to any location a traditional shortcut can be placed. If the app you want to virtualize doesn't automatically create a Start menu shortcut, or the app is already included with Windows (Internet Explorer 6.0 for example), you simply need to create a shortcut for it in Desktop Mode under c:\documents and settings\all users\start menu and the app will appear on the host start menu under Windows XP Mode Applications.

Seamless Mode isn't completely seamless; there are couple issues with it. In multi-monitor setups, the virtual application only lives on the primary monitor. Also, virtual apps don't want to play along with the Windows 7 Snap feature. Their Windows needed to be manually resized. It's also important to note that virtual applications and Desktop Mode cannot be used simultaneously. Finally, you'll need to keep in mind that a full OS needs to boot before a virtual app can be run, so a little patience will be needed on that first launch.

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