So, I have finally had my hands on Microsoft Hyper-V. I've installed Windows Server 2008 with Hyper-V role on my laptop for creating virtual machines. I've decided to virtualize my Windows XP work-machine so that I won't have to worry about backups in case it got corrupted. What I had in mind was to simply create a virtual machine with all the work-related applications installed and create a network folder that maps to my host operating system's local drive, making it easy to backup - just backup the VM once for the base image and regularly backup the folder containing my files. Unfortunately, in order for you to take full advantage of networking and all sorts of stuff in Hyper-V guests, you need to install Integration Services. This, however, requires Service Pack 2 or higher on Windows XP machines. There are a few ways to install Service Pack 2 or higher on a Windows XP virtual machine running on Hyper-V: install using a CD, a USB drive or a network drive. I am not about to embark on any of the first two options since I try to avoid creating CDs for patches and service packs to save on disks (not to mention saving the environment a few non-biodegradable materials) whereas USB devices are not supported on Hyper-V, something that a lot of customers have been asking for. That leaves me with the network drive option. The solution: add a legacy network adapter. A legacy network adapter emulates the physical network adapter of the host operating system, thereby, not needing virtual machine drivers for the guest operating system. That is all I need to know to get Windows XP Service Pack 2 and higher installed on my virtual machine. I've added a legacy network adapter on my virtual machine and set it to the same IP subnet as that of my host and I have a virtual network between my host and my guest. This TechNet article describes configuring networking on Hyper-V

After managing to install Windows XP Service Pack 3, I can now install Hyper-V Integration Services and work on the usual networking stuff using the Hyper-V emulators and drivers. Since I no longer need the legacy network adapter, I removed it immediately after installing the service pack as I now have the option to add network adapters that can be recognized by the guest operating system.

You can read more about Hyper-V Integration Services from this article