Virtual Machines Network Services woes 

You might already have found out that Virtual PC 2007 has been officially released (see previous post from Dennis Doomen). After uninstalling the RC version on my Vista Business laptop, I immediately ran into the same trouble I had before: Virtual Machine Network Services will not install correctly! Last time I got so desparate, I did a clean install of Vista and immediately installed VPC afterwards with success. This time round, I poked around on the Internet a bit more, and found a solution on the Virtual PC Guy blog (it worked for me at least, see link below). Turned out that there's a invalid registry setting which caused all the problems: [HKLM\SOFTWARE\Microsoft\Windows\CurrentVersion] contains a REG_EXPAND_SZ entry called DevicePath that contains a reference to C:\inf. Changing this value to C:\Windows\Inf did the trick.

Virtual PC Guy blog entry