I have been using MS Virtual PC 2007 for several months now. What is Virtual PC you ask. Well, from the MS web site:

Use Microsoft Virtual PC 2007 to run multiple operating systems at the same time on the same physical computer. Switch between virtual machines with the click of a button. Use virtual machines to run legacy applications, provide support, train users, and enhance quality assurance.

Virtual PC lets you create separate virtual machines on your Windows desktop, each of which virtualizes the hardware of a complete physical computer. Use virtual machines to run operating systems such as MS-DOS, Windows, and OS/2. You can run multiple operating systems at once on a single physical computer and switch between them as easily as switching applications—instantly, with a mouse click. Virtual PC is perfect for any scenario in which you need to support multiple operating systems, whether you use it for tech support, legacy application support, training, or just for consolidating physical computers.

Best part, it is a free download from Microsoft

So why am I doing this? My main reason has been that it allows me to easily test my web sites in Internet Explorer 6 since I normally run version 7 on my laptop and you can't run both on the same machine. You do need an operating system that can be installed. Luckily I had an extra key for a copy of XP home and a slipstreamed install CD. If you don't have an extra operating system laying around you can get a time bombed version from MS that was intended for just the purpose I use the virtual machine for here.

The software installs easily and worked for me the first time (not all software does...)

If you ever wanted to play with Linux on your windows machine, this would be a great way to do it as well.