While Virtual PC 2004 is now free, as will be Virtual PC 2007 (designed for Vista support), I recommend using VMWare Server, which is also free of charge and works with Vista smoothly. Just be sure you have enough RAM...you'll pretty much need to meet XP's requirements and Vista's requirements at the same time if you want decent performance.
Hope this helps,
I just downloaded Vista RC1 and don't want to overwrite XP, so i want to try virtulization. But, VPC 2004 is for Professional and i dont want to have to pay for software. Any ideas?
Thanks in advance