I have always my latest system image mounted to a virtual machine as a second hard drive, to be able to exract files whenever I need to. This
tutorial shows how to that, you can use the same principle to mount an image as a main hd in Virtual PC or VirtualBox machine.
However, Whs had a good point: you need to have a licence to use the same Seven installation (= image) on a separate (virtual) machine. That's also the reason I'm mounting the image as a second HD, not as a system drive.