This Guest Post is contributed by Tibor Schiemann, Co-Founder and Managing Partner, TuneUp blog.

Part of Windows 7, Windows XP Mode (also known as “Virtual Windows”) is designed to make the transition from Windows XP as smooth as possible. It runs a full copy of the former Microsoft operating system in the background, so that Windows 7 users can install and run applications that are not compatible with Microsoft’s latest operating system. However, there are some performance issues users can run into when using Windows XP Mode.

Prepping for Virtual Windows on Your PC

To run older applications under Windows XP Mode, you’ll first need Windows 7 Professional, Enterprise or Ultimate; it doesn’t matter if it’s the 32-bit or 64-bit architecture.

Then, in terms of hardware, I recommend using at least a Core 2 Duo 2 GHz processor and having 2 GB (or more) of main memory and 20 GB of free hard disk space for Windows XP Mode. Simulating Windows XP takes up a lot of resources because you are basically running two operating systems at the same time—your Windows 7 and the virtualized XP.

One bit of advice though—it is best to go with a processor that has a hardware virtualization feature, which allows Windows XP Mode to run nearly as fast as the true operating system. Without hardware virtualization, you will likely notice slower performance when working with older programs. To find out if your PC already supports this feature, download the Microsoft Hardware-Assisted Virtualization Detection Tool.

Before getting started, you’ll need a few additional downloads. These include one for Windows XP Mode itself and another for the software for simulating Windows XP inside your Windows 7 system. For users without hardware virtualization on their PCs, an update is also required.

Fine-Tuning Windows XP Mode’s Performance

In its default setting, Windows XP Mode is not tuned for optimum performance, and not all of the important features are necessarily enabled. There are many resource-draining elements because these are needed for the “real” operating system but not for the virtualized one. Here are the six most essential steps for maximizing Windows XP Mode’s performance and functionality.

1. Share an Internet connection. Running your older Windows XP application might require a working Internet connection. To see if Windows XP Mode is connected, launch Internet Explorer. If the browser’s default website does not appear, click on “Tools” in the Windows XP Mode window and then “Settings”. Go to “Networking” and select your network adapter rather than the default setting. Hit “OK”, wait and try it again.
2. Use Windows Update to install the latest software settings. Once your virtual computer is connected to the Internet, download the latest updates by clicking on “Start” and going to “All Programs/Windows Update.” Install all of the pre-requisite updates, and once you’re finished, select all of the “High Priority” updates using the “Custom” view. Then, go to the optional software category and install the updates that are necessary for Windows XP Mode machine.
3. Disable sounds. To do this, go to “Start” and then “Control Panel”, and click on “Sounds, Speech and Audio Devices”. Hit “Change the sound scheme”, select “No sounds”, and then click on “No” and on “OK”.
4. Use Turbo Mode. This TuneUp Utilities feature is perfectly suited to a virtual environment. With one click, it disables many Windows XP Mode features that aren’t necessary and only consume memory as well as processor resources, such as automatic defragmentation, maintenance tasks and synchronization features. This stuff is important for actual Windows XP PCs but not for running older programs.
5. Install your old programs. Insert the CD or DVD with your Windows XP program, go to “My Computer” and install it like normal. If it’s a program you downloaded, you’ll need to access the hard disk drive on your “real” computer. To do this, go to “My Computer” and look at the “Other” category. These physical drives are easily accessible for sharing files between your “real” PC and “Virtual Windows”. (Note: In some cases, running a setup installer from one of these shared drives might end up in an error message. If you encounter this, copy the file from your Windows 7 PC to the Windows XP Mode desktop and run it from there.)
6. Run your old programs. Finished installing all of the legacy applications? Log off from Windows XP Mode and hit the “X” to close the virtual machine. All of the programs you installed will be available in your Windows 7 start menu. Moving forward, as soon as you launch one of these Windows XP Mode applications, “Virtual Windows” will run in the background—but the actual program feature will, in fact, appear as a regular program window under Windows 7.

With these Windows XP Mode tweaks, you’ll be able to squeeze as much performance and functionality as possible out of your virtualized machine. For more background information on Windows XP Mode, a step-by-step guide on setting it up and common “Virtual Windows” FAQs, visit the TuneUp Blog about Windows.