Windows XP Mode let’s you run applications that are designed for Windows XP, right on your Windows 7 PC. Earlier, Windows Virtual PC and Windows XP Mode could run only on computers whose processors have the Hardware-Assisted Virtualization (HAV) feature enabled. Here are some screenshots from one of my test systems with IntelĀ® Core 2 Duo Processor E4500 (which has no Hardware-assisted Virtualization support) running Windows 7 Ultimate RTM.
HAV Detection Tool Screenshot
The Hardware-Assisted Virtualization Detection Tool tells "This computer does not have hardware-assisted virtualization".

That’s correct! The Processor has no VT support (cf: Intel Processor Specs)

And, the message "Cannot start Windows Virtual PC Host Process. Check the System event log for more details" came up when installing Windows Virtual PC.

Windows XP Mode Update for PCs without HAV support
Microsoft released the Windows XP Mode Update KB977206 last month which removes the prerequisites required to run Windows Virtual PC and XP mode. Sigh! This is a big relief for users whose PCs have no HAV support. Installing the Windows XP Mode update (only for PCs with no HAV support) and rebooting the system enabled me install and run Windows Virtual PC and Windows XP mode.

Download: Update for Windows 7 for x86-based Systems (KB977206)
Download: Update for Windows 7 for x64-based Systems (KB977206)
Related Links
Install and use Windows XP Mode
Windows Virtual PC: Configure BIOS
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Applications created for Vista usually run fine in Windows 7. Please check the software documentation to learn if it supports Windows 7 or not.