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If so, which one (VMware, VirtualBox, Virtual PC, Xen, QEMU, Bochs, etc. or something else)?

Inside which live CD environment (BartPE, Linux-based, etc.)?

And how?

I'd be looking to use Windows XP within the virtual machine.

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I realize that you can use BartPE on a USB key, although you must realize that it's usually a bare-bones XP environment usually used for system recovery.

An easy solution to this problem would be to simply take a live Linux-distribution, and on the disc, put VirtualBox. Then, you could simply have a .VDI (virtual hard disk file used by VirtualBox) on a USB flash/hard drive, which you could pre-install Windows XP onto.

You can get a list of the Linux distributions that VirtualBox supports here.

Breakthrough
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Do you need to use virtualization? BartPE will allow you to boot directly to Windows XP from a CD. You will get much better performance from booting directly than you would running inside of a virtualized environment.

heavyd
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  • I see what you mean, but it would be nice to have a fully configured, full fat environment in which to work and test. Would booting into full installation of Windows XP from a USB stick be possible? – Umber Ferrule Aug 04 '09 at 14:51
  • Yes though unless you have a large USB stick, just use an external USB drive ;-) – Ivo Flipse Aug 04 '09 at 14:54
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    http://superuser.com/questions/17880/can-i-install-windows-os-windows-7-on-a-removable-usb-hard-drive/17883#17883 Here's a question where it's explained how to do this – Ivo Flipse Aug 04 '09 at 15:01
  • Or if you really want Linux: http://www.pendrivelinux.com/ – Ivo Flipse Aug 04 '09 at 15:28