Free Virtual PC

I wasn't surprised to read on the StrongCross blog (which seems to be temporarily down) that Microsoft Virtual PC 2004 is now free. This is the way Microsoft has dealt with competition since the "Browser Wars". The competition in this case is VMware, who have a free VMware Player and VMware Server. VMware also has a full range of virtualization products which run on both Windows and Linux.
Virtual PC 2004 is similar to VMware Workstation in that it allows you to create Virtual Machines on Windows 2000 or later Operating Systems.

Okay, after that techno-speak explanation, basically both products allow you to run another Operating System in its own environment. So you could have Windows 98 running in a window on Windows XP, and install programs on Windows 98 which would not know about the Host Operating System (Windows XP in this example). Virtual PC officially supports DOS and most flavors of Windows. Unofficially it also can run some Linux distributions and other Operating Systems (see "What works and what doesn't in Microsoft Virtual PC 2004" here).

It's a great way to have a test box to try out programs - when you shutdown an Operating System in Virtual PC you have the choice of keeping any changes or discarding them. There is also a choice to keep changes separate and merge them later.

Virtual PC 2004 is easier to use than VMware Workstation, but that comes at the price of flexibility and powerful features. Virtual PC doesn't emulate USB ports, whereas VMware Workstation does (although only USB 1.1). VMware Workstation of course isn't free, but VMware Player is. VMware Player allows you to run Virtual Machines (called "Appliances") others have made.