virtual OS

Is it possible for a hacker that can take over a victim's Windows XP Pro SP2 or 3 OS simply by virtualizing it?

If so, how can the victim know if the OS is virtual and the physical desktop PC became a virtual machine (including the CPU, RAM, CD/DVD drive, HDD etc) and was connected to a virtual network via cloud computing (aka virtual server)?
Is there a free download program that can detect it?

If the victim's PC became a virtual machine and was connected to a virtual network, how can the victim be able to disable/disconnect from the virtual network and uninstall the virtual machine program?

The possibility is close to 0.

Even if you wanted to do it on purpose, it's extremely difficult to do so. It takes a lot of efforts to un an existing (physical) copy of windows xp inside a virtual machine. You need special software to do that, such as our MyOldPCs cloning software. In other words, the windows registry entries will have to be modified, and lots of hardware change notifications will appear when xp boots inside a vm.

One thing the user would immediately note is that his/her windows XP will no longer be activated. The user may not be able to login at all without re-activation.

You can also check the virtual hardware, each virtual machine vendor use unique PCI device ids, you can look at this registry key:

[hkey_local_machine\System\CurrentControlSet\Enum\PCI]

and most obviously, the performance will be slower when running a full blown xp inside a vm.

what a cool idea! I am going to have to explore this... sort of an all encompassing keylogger!!