So XP Mode is a major bullet point in the list of Windows 7 features. Yay! Except that the way it works — by using Microsoft Virtual PC and a legit copy of Windows XP SP3 — requires that your CPU have Intel VT virtualization support. Whoops, not all CPUs have that!
This isn’t the sky falling, of course: XP Mode is a special feature targeted at businesses that have legacy applications that require Windows XP. Such operations will be required to confirm that the hardware on which they’re running includes CPUs with the virtualization technology. For your average desktop and laptop PC, chances are you’ll never actually need to run XP Mode.
And if you do, you can always try VMWare or VirtualBox or something…