I recently discovered that while the technology was available the end user experience was not as smooth as I would have imagined it should be. I have seen many posts online with simillar symptoms. After I installed my new laptop with Windows 7 Ultimate x64 and installed the new Windows 7 virtual pc and XP mode, the virtual machine running Windows Server 2008 R2 was extremely slow and I was unable to work.
After some research the following items resolved my VM performance issue.
1. Install the following in sequence:
- WindowsXPMode_en-us.exe
- Windows6.1-KB958559-x64.msu
- Windows6.1-KB977206-x64.msu
2. Next install the Integration Features, very important.
3. Add your VHD folder to the exclude files and location on Microsoft Security Essentials. (Probably the main culprit)
4. Add the VMWindow.exe and vpc.exe processes to the Exclude Processes section in Microsoft Security Essentials.
5. Adjust the display for performance in the VM:

6. Adjust performance for programs in the VM:

7. Run windows update on the virtual machine. This ensures that you get the latest bits to support the hardware virtualisation.
Hope this helps anyone with performance issues in Windows 7 x64 virtual machines.
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