I've been using VMware Fusion on a Mac to play with Fedora 8 (Linux). However, I just learned about this blog entry that gives step-by-step instructions (with screen caps) for installing Fedora 8 under Virtual PC 2007.
The important screen cap to pay attention to is the one change during the grub reboot to add i8042.noloop (mentioned in my CentOS/RHEL blog entry) to deal with the mouse problem.
One of the reasons I'm using Virtual PC less and less is that VMware and Parallels does a much much better job of installing and running Guest OSes.
I'm looking forward to trying Hyper-V under Windows Server 2008 as soon as I can get a PC with the specs to run it properly.