Before I even try to install Windows 7 RC, will I be able to virtualize Windows server edition there?
Microsoft Virtual PC 2007 SP1 does not seem to be compatible with w7 (as the installer states it).
The updated version of Virtual PC that works on Windows 7 (it's still in beta) is available here: http://www.microsoft.com/windows/virtual-pc/default.aspx.
The UI is different... if you have trouble discovering how it works, I cover it in the second half of this post: http://blogs.technet.com/seanearp/archive/2009/05/14/virtual-windows-xp-and-where-did-the-ui-go.aspx.
Try Sun's Virtual Box instead. I have been using it for a while because it allows Linux installs much more seemlessly as well as windows guests. I have been running windows 7 as a guest in virtual box, and the blog entries claim they now have full support for Windows 7 as both guest and host. And Virtual Box is free. http://www.virtualbox.org/