Windows Virtual PC in Windows 7 features an unique and useful feature which allows virtual applications installed on guest operating system of Windows XP or Windows Vista in the virtual machine to be seamlessly accessed and launched from host Windows 7 desktop as if it’s running on the end user’s local computer. Users can run programs from guest virtual machine side by side with local programs, with full ability to minimize, maximize, and resize the program window, and can easily start multiple programs at the same time.

The seamless applications integration of Windows 7 Virtual PC feature is utilizing RemoteApp technology from Terminal Services (TS). Microsoft includes RemoteApp feature into Windows Virtual PC for Windows 7 to provide application backward compatibility for some programs and software utilities that can only run in Windows XP or Windows Vista.

To convenient Windows 7 users who need to instantly get started running Windows XP productivity applications, Microsoft is providing pre-configured and pre-activated Windows XP virtual machine as in Windows XP Mode. However, some users or administrators may prefer to install their own operating system into the virtual machine as guest OS. In these cases, users who want to use the seamless applications integration feature can download KB961741 or KB961742 RAIL QFE update from Microsoft to enable RemoteApp.

Note that the patch will have to installed in Windows XP SP3 or Windows Vista SP1 or Windows Vista SP2 virtual machine running in Windows Virtual PC in Windows 7. It is is not required for Windows XP Mode image downloaded from Microsoft though, as it’s already been pre-configured.

Download RAIL QFE KB961741 for Windows Vista SP1 or above

Microsoft Download Center: Windows6.0-KB961741-x86.msu

Download RAIL QFE KB961742 for Windows XP SP3

Updated Version:
Microsoft Download Center: KB961742-v3.exe

Older Version:
Microsoft Download Center: KB961742-v3.exe

TechNet and MSDN: en_rail_qfe_for_windows_xp_sp3_x86_439642.exe