I have a device for which there are no 64 bit drivers (a USB connected scanner). I am replacing the 32 bit machine (Windows XP) to which it is attached with a 64 bit Windows 7 machine. Will it be possible to create a virtual 32 bit machine instance in the 64 bit environment to run that scanner?
Yes you can install those drivers into a 32-bit OS running in a VM on a 64-bit host. The biggest concern is ensuring you use a VM solution that allows passing the (assumed) USB connection for the scanner.
Since you mention you are using Windows 7 you may (depending on your edition of Windows 7) be able to use the "XP Mode" VM setup supplied by Microsoft. It's existence is intended for these exact situations.
If you install 32-bit Windows XP, it will run as 32-bit
You can then add the scanner as a device on the XP machine.