This information is very hard to find currently on the internet. Windows 7 versions from Professional upward are capable of running a full version of Windows XP in virtual mode, if the hardware of the computer is fully compatible. Hardware such as the CPU, motherboard, graphics, and RAM all affect whether or not XP mode is even possible. Manufacturers, sellers, and reviewers consistently omit any mention of whether or not this is possible.
I just want to document that an Acer 5430-6670 running Windows 7 Professional does run the XP mode.
Since the above was published, Microsoft changed the hardware requirements of its XP mode so that hardware virtualization is no longer necessary. However (theoretically) the XP mode will run faster if hardware virtualization is possible on the host machine. 23 May 2010.
27 Sept 2010 – I bought a Lenovo R500 yesterday for a terrific price, since the model has recently been discontinued. It has 3 GB RAM (soon to be upgraded), 160 GB HDD capacity (soon to be upgraded), and runs Win 7 Professional 64-bit. One of the first things I did was run Microsoft’s HAV.exe utitity. HAV told me I had to program the BIOS to allow virtual mode Win XP. This involved hitting the blue key at the top of the keyboard, followed immediately by F1, at the beginning of the boot process. This opened up the BIOS screen. Several levels deep there were 2 key changes that had to be made to allow virtual mode. Then the machine had to be turned off (not just rebooted) and turned on again. Then Microsoft had 3 successive downloads to provide (one of them almost 500 mB in size) and installation processes, then a long WinXP initialization process, and I was running Win XP in its own box within Win 7 Pro. The first thing I had to do after that was download & install a free antivirus, which in this case was Avast!.