-----Copy From http://kartones.net/blogs/kartones/archive/2009/02/18/installing-debian-5-0-in-virtual-pc-2007.aspx
After some digging on the net, I found that it is a problem of the latest linux kernel builds and Virtual PC, which can be solved by selecting “Graphical Install” but instead of pressing ENTER, pressing TAB and adding the following at the end of the command line:
noapic nolapic noreplace-paravirt
Also, modify “vga=788” parameter to “vga=791” to avoid strange resolutions.
Then you can install it as you would do with a physical/real install (a standard + web server install takes only about 2GB of space counting swap partition).
Once installed, this parameters will stay and you no longer will get the VPC error, but the problems are far from finished.
To enable sound, go to System –> Preferences –> Sound and change all to ALSA sound system
To enable internet, change your VM settings to use Shared Networking (NAT) and configure it under Linux as DHCP/automatic. I couldn’t configure a standard ethernet card mapping without NAT.
To enable higher resolutions (at least standard ones), modify the /etc/X11/xorg.conf file (with nano for example) and replace the three sections “Device” “Monitor” and “Screen” with this new content:
Section "Device" Identifier "Configured Video Device" Driver "vesa" BusID "PCI:0:8:0" EndSection
Section "Monitor" Identifier "Configured Monitor" Option "DPMS" HorizSync 30-70 VertRefresh 50-160 EndSection
Section "Screen" Identifier "Default Screen" Monitor "Configured Monitor" DefaultDepth 16 SubSection "Display" Depth 16 Modes "1280x1024" "1024x768" "800x600" EndSubSection EndSection
Save, restart Linux and finally you have a decent Debian 5 virtual machine! Mouse still gets hooked into the VM, but not being able to install the VM Additions you can live with it.