If you're got XP software there is free Virtual PC software available. VMware Player is now free, Virtualbox (a pain to network and share) and MS I believe has a free one. VMware Player now lets you create a VM.
I tried XP Mode when it was RC and found it pretty lame compared to my VMware Workstations.
The big draw with XP Mode is it provides the XP. Right now I just finished installing VM Player and am loading Windows 7 Home Premium on it. This is on my old Dell Dimensions 8200. I tried in Virtualbox last night and forgot how lame the sharing with that is. I'm curious if everything would work. The wiundows Upgrade Adviser leaves a lot up in the air! Dell's site is useless for a pc that old.