Working with an emulators or a virtual environments is very useful in the embedded space as Hardware mightn’t be available, connectivity might complicate the development process. Up to Windows Embedded CE 6.0, an ARM emulator was provided in the box to allow for tests and debug on an emulated environment. Windows Embedded Compact now comes with a Virtual PC BSP, allowing one to build, deploy and use a Virtual PC machine to do his work.
Here’s a short video explaining how to setup a Virtual Machine to run a Windows Embedded CE/Compact image:
One really convenient tool used in the process is called ‘diskprep‘.