My first experience with Windows 7 virtualization was a bust. tried to install it on a friend’s brand new laptop and got an error saying that Win7 requires hardware virtualization.
MS KB977206 allows you to run XP mode on systems without hardware virtualization. You can download the Win7 32-bit update here and the Win7 64-bit here.
Apparently without hardware virtualization you will not be able to cut and paste between windows. still prefer VMWare, but this fix is welcome