We talked about XP Mode—which runs programs that work in XP but not in Vista—in our Windows 7 RC1's hands-on. Now Microsoft is coming up with details about what hardware and licenses this will need.
• A CPU that has true chip-level virtualization from Intel or AMD.
• 2GB of RAM minimum.
• While XP Mode will be a free download for buyers of Windows 7 Professional, Windows 7 Enterprise, and Windows 7 Ultimate, you will need a licensed copy of Windows XP Service Pack 3.
All seems very straightforward except the virtualization part. According to Microsoft's Scott Woodgate, "Some PCs have [chip-level virtualization] and some don't. It's not as clear as it should be relative to which PCs have support and which don't." Hopefully, they will release a tester program along with Windows 7. [cnet]