First, a caveat. This is not supported. Most of what I am about to talk about is not supported. Feel free to use this information, but do not call Microsoft if it does not work for you.
With that out of the way – this morning I was asked how to get a Windows Server 2008 core installation working on Windows Virtual PC, with integration components. This is possible, and very handy, but is a little tricky to do.
Windows Server 2008 will install onto Windows Virtual PC in a core configuration with no issues. But when you try to install the Integration Components, the installer will fail.
The problem is that the installer is trying, and failing, to initialize the sound card driver that is part of the integration components. What you need to do is to disable the sound card in the virtual machine.
Source : Virtual PC Guy's WebLog
