want to install xp using virtual pc 2007 on an xp box

[ClarkCline]

I am running Windows XP SP3 with all current updates. I installed Virtual PC 2007 and want to install XP3 into the virtual drive. Is there any way to do it from the Windows desktop? I tried doing it with my original installation CD, but I got the dreaded " You can't do that 'cause the operating system you are using is newer than the one you are trying to install." I also tried it with what I thought was a fully patched ISO I made yesterday with nlite, but I guess I missed some updates. Got the same error message.

If I boot up from the CD, will the installation recognize the virtual drive I have created? I really need this 'cause a friend gave me a software program that he made, and I don't want to screw-up my real installation.

I'm gonna be building a new Windows 8 box in a couple of months, but I'm not ready, yet.

I could really use some good suggestions.

Thanks

[jaclaz]

Is there a particular *need* for having the XP in the VM "fully updated"?

If not, it would be simpler to get a pre-made .vhd from MS, there are the "testing IE" ones that are normally "good enough":

http://www.microsoft.com/en-us/download/details.aspx?id=11575&ppud=4

jaclaz