These are the main pros and cons of VMLite.
Pros:
(1) Runs faster. No RDP/RemoteApp is getting in the way.
(2) no requirement for VT-x or AMD-V
(3) supports more virtual disk formats
(4) vpc has a disk capacity limit of 127G, while VMLite has a limit of 2TB. 127G is way too small to run virtual machines converted from a physical computer.
(5) supports 64-bit guests, vpc only works with 32-bit guest OSes.
(6) supports multiple virtual CPUs, whereas vpc only works with a single vcpu.
(7) better and faster graphics. VMLite supports 32-bit true colors, and supports 3D/2D acceleration from version 3.1.2. VPC seems to have only 16-bit colors, and no support for 3D/2D. For example, if you play Google Earth in vpc, it will be very slow. Another example, you won't be able to play SecondLife in VPC, whereas VMLite 3.1.2 has no problems in playing SecondLife.
(8) VMLite file sharing is much faster than vpc, since we don't use tcp/ip to transfer files, instead we forward kernel level IRPs between host and vm, and between VMs.
Cons:
(1) VMLite does not support USB devices at the moment, while VPC/XP Mode has strong supports for USB devices. (We are working on it, takes quite some time, though)
(2) VPC/XP Mode does better job to integrate individual virtual apps, with taskbar integration. We are implementing this feature on VMLite too.
In summary, after we implement USB and single application mode, VMLite will be superior to VPC in every aspect.