For anyone who wants to know the solution:
When setting up the VHD it will prompt you where to install the files. Before you start configuring VHD check (Show hidden files, folders, and drives) so you can view the 'Default' user folder when setting up VHD.
Specify the installation to be C:\Users\Default (if you don't see default its because you have it hidden -- see above)
Be sure to give appropriate permission to the folder that where VHD file is installed. Now, under the XP Mode Application folder I can add apps I want everyone to be able to use.