Microsoft has released an update to Virtual Server 2005 R2 SP2 and Virtual PC 2007 SP1.

Virtual PC 2007 SP1 adds support for Windows Vista SP1 and Windows XP SP3 as both host and guest operating systems.  It also adds support for Windows Server 2008 Standard Edition as a guest operating system.

Download | Release notes

Virtual Server 2005 R2 SP1 Update: This update to Virtual Server 2005 R2 SP1 adds support for the following operating systems as both host and guest environments:

• Windows Server 2008, Core Edition
• Windows Server 2008, Standard Edition
• Windows Server 2008, Datacenter Edition
• Windows Server 2008, Enterprise Edition
• Windows Server 2008 Small Business Server
• Windows Vista Ultimate with SP1
• Windows Vista Business with SP1
• Windows Vista Enterprise with SP1
• Windows XP Professional with SP3

Download | KB

Source:→ Microsoft