When I was working at Connectix it was occasionally reported that the checked version of Windows XP would not run under Virtual PC (Driver developers use the checked build of Microsoft Windows to identify and diagnose operating-system-level problems – you can find more details here: http://s.microsoft.com/whdc/DevTools/tools/chkblds.mspx) but we never really had the time to investigate this. When we were acquired by Microsoft we did finally get around to looking into this issue.
It turned out that the checked build of Windows was recognizing our emulated motherboard as a problematic device and displaying a blue screen immediately on boot. The solution to this was to change one string in our emulated motherboard to make it report itself as an “Intel 440BX Rev.2.” motherboard instead of just an “Intel 440BX” – and the checked build was now happy. Apparently the original revision of these motherboards had a number of bugs which affected driver developers – none of which were in our emulated version.