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When I start the Hyper-V management console, the option for adding a new virtual machine is not present. I'm running Windows 2008 Server x86 (not R2).

Is there a service I need to start, or could it be that only the x64 version can run virtual machines locally?

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Hyper-v role can only be installed / enabled on X64 Based machines and processors with Intel-VT extensions (execute disable bit) ; Hardware virtualization is normally switched on or off from the server / computer BIOS.

only x64 machine can run hyper-v virtual machines

you can use vmware server , virtual box to run a virtual machine locally on a x86 system.

virtualbox can use vhd files too.

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The Hyper-V role was installed without problems on my x32, but it seems that only connection to existing vms are allowed in that case. – Zano Jan 19 '10 at 10:46
Yes, with your x32 version you would be able to connect and manage a hyper v server on your network. Just like if you install the tool son Windows Vista/7 – Wayne Jan 19 '10 at 12:25
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