If you have a VM ware or run the XP Mode the vhd is mainly isolated from anything involving the host OS Windows 7. I have the MS Virtual PC as well VMWare Lite Workstation that both run the XP Mode as well as VirtualBox running other OSs but never caused any problem.
Note you shouldn't be running any VM ware, XP Mode, or even av, firewall programs when going to install since those could interfere with the SP install.
The fact that I restored a full system image to the main drive however prevented the SP1 beta and RCs from going on the 64bit Ultimate here until the final release was out this week. Then the error informatio revealed the solution to see results from the SP installer's problem accessing the host volume.
If you are running into a specific error there should be a link to an MS page that will hold some options to try to solve the install problem. Note that the Windows Update Readiness Tool and another update are required to be installed prior to either going through the WU site or download of the stand alone package to see results.
You will also want to review the steps MS has up prior to the next attempt. Steps to follow before you install Windows 7 Service Pack 1 from the Microsoft Download Center