Once you install the new version of Virtual PC (Windows Virtual PC) you can not install VPC 2007.
But, Windows Virtual PC is the newest version of VPC and works just fine,
it's just different, you should learn how to use it in Win7, creating the VHD's is different than in VPC 2007.
You can then install a VPC of XP as you normally would in 07, you just can't use the Virtual XP Mode ISO that you also D/L'ed with WVPC.