The host operating system is Windows 7 Home Premium SP1, which means I cannot run the MS XP mode, but I understand I can run my own version of XP. It is a new PC and has only run Win 7. The previous operating system is MS Win 98. I have downloaded and run the MS virtual machine for Win 7 and this appears to be OK. I have set the disc size to a max of 5 Meg and the RAM to 2 Meg. ( The desktop PC has 1x4Meg DDR3). Once the virtual drive has been configured, at the relevant point I insert the slipstreamed XP SP3 disc, the PC reads it, confirms SP3 and then asks for the original WIN 98 disc. I change these over and then after reading it, asks for the XP disk back. The software then says it is copying all the files over presumeably to the hard drive and you see them being read and the progress bar moves all the way along. Once it has finished that it then says Windows is starting and just stops. The blue screen either locks up and disappears or I get the black screen which is also unresponsive. The reason I slipstreamed the original SP2 disc is that I got a STOP error when using it and I read online that I should only use SP3. I have used the MS routine to confirm the MB is configured to run the virtual machine. My original post was asking if it possible to use nLite to slipstream an Upgrade XP disc with an original disc (in this case Win 98), or round the other way, so that I only have to have one disc and reduce any chance of errors.