I am currently working on a Compact Framework project, and started development on a different machine - where I successfully used the Cellular Emulator of the Windows Mobile SDK. Today, on the other machine (the laptop), it didn't start but present me with the following error message:

After some searching (on the G-word search engine), I came across this post:
http://forums.microsoft.com/MSDN/ShowPost.aspx?PostID=3538593&SiteID=1
Sure enough I am using Vista x64, heck, we are living in 2008 with multicore CPUs and 4GB+ of RAM!
And here is the Catch 22: when moving development to a Virtual PC image, you don't get USB ports which you need for connecting to a real device...