I’ve been experiencing random crashes with Virtual PC 2007 with Service Pack 1, and finally I got fed up with them and decided to see if I could find a solution to the problem.
It turns out that there is a hotfix that solves not only that problem, but increases the maximum screen resolution of the virtual machine, so if you have a high resolution monitor and use Alt-Enter to go full screen, it will actually fill up the screen. Woohoo! There are a bunch of other fixes in there as well, so read the description in the link below.
Download the hotfix at: http://support.microsoft.com/Default.aspx?id=958162