I'm finally satisfied with my Virtual PC 2007 install on my Vista laptop. Just for reference, the VM is made up of several files in a dedicated directory... just like VMware. In the table below, the first item is the file extension, followed by the extension's name, followed by a description of what the file does.
vmc = Virtual Machine Code, VM descriptor file
vhd = Virtual Hard Disk, the actual image (may be more than one)
vud = Virtual Undo Disk, changes to disks are discarded when
the VM is powered off (great for testing things)
vsv = Virtual SaVe state, allows the VM to be paused
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