The first time you click inside your VM, Virtual PC will attempt to "capture" your mouse pointer. Once it's inside the VM, you won't be able to move it out of the window without using a special key combination (Right-Alt, by default.) You probably will recieve an initial prompt about this. This mouse pointer capturing business is really annoying, especially for someone used to using VNC to remote control computers. Happily using some extras for VPC, we can stop the Right-Alt madness. More on that later. To get extra VPC features like sharing the mouse and folders between guest OS and host, start up your XP VM, and from the Action menu, choose "Install or Update Virtual Machine Additions" (the key command is Right-Alt-I). VPC will go through its paces and prompt you to reboot the XP VM. Once VM Additions are installed, you can move your mouse between your XP VM and Vista host without having to press Right-Alt to free the pointer. Additionally, you can share folders from the host PC to the VM. Check out the Settings area to do that, as pictured. And then thats it your finished!!!