Hi XPCat,
Out of curiosity, why are you wanting to run XP inside a VM running on XP ? If your concerns are for security, then you would be more efficient to make sure all your Windows updates are up to date, that you have up to date anti virus and anti-malware software, and run a system scan from time to time. In fact, that all your patches are fully up to date. Secunia PSI is very useful for this.
I recently installed a VM on my own computer which is running 64 bit Win 7. (1) because I had a legit copy of XP to hand, and (2) because I had a moderately old game which I just cannot get to run on my installation of Win 7. I have since discovered that some very old CAD software of mine will run in this VM as well, a bonus. But I have XP running in the VM, not Win 7.
I installed the VM Player which I got from
http://www.vmware.com/products/player/ This proved very easy to set up and to use, and I am quite happy with it. However the game - Microsoft Train Sim - does not run as well in the VM as it did when I last had it working on Win 7.
Chris Cosgrove