(Note: new URL as of ) I have just tested the settings from Aaron on a Windows XP SP3 image running under Virtual Box 3.1.2 which previously failed with the dreaded 'As soon as the two extra settings were added to the RDP file (see steps c and d below), I could run Notepad via Remote App quite happily.I'll be doing more research into this and will update some of the screen shots in this post, but I thought I'd post this update as soon as possible to help people right away. This is used within the XP Mode within Windows 7 to provide seamless application integration where applications running under Windows XP appear as application windows floating over the Windows 7 desktop.
UPDATE : I finally discovered where the Remote Desktop team documented this process last December and thought it might be useful; com/rds/archive/2010/03/08/UDPATE 20 February 2010 : Sorry for how long the final solution took to discover, but thanks to Aaron Parker's blog entry at now have the final missing pieces that allow remote applications to be hosted within a standard Windows XP SP3 virtual machine.
UPDATE 5 July 2011 : Kim Knight has now written a GUI tool for configuring remote apps which makes the process a lot easier and less error prone,
This is important if you are already running virtual machines in another platform, such as Virtual Box or VMWare Workstation (or Player) as running Virtual PC XP Mode has a habit of causing your other virtual machines to crash with very little warning.
Also, unlike XP Mode, seamless mode in Virtual Box or ‘unity’ mode in VMWare Workstation, you can use this on a non local virtual machine.
Since then, a lot of you have been asking to a write up a tutorial about doing the same thing using Virtual Box.