Just for the sake of the topic here is how to recover forgotten password of Windoes OS in VirtualPC

How to break/recover Windows Server 2003/Windows XP password in VirtualPC
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1. First, go to where your virtual machines are stored, in my case it is at:
C:\Documents and Settings\OSC049\My Documents\My Virtual Machines\fabrikam

2. Second, you have to remove all the “.vmc” and “.vud” files; in my case
under the fabrikam folder, except the virtual hard drive “.vhd” file(s).

3. After that, download Ophcrack from “http://ophcrack.sourceforge.net/”
and burn onto a cd.

4. Run your VirtualPC console and open your virtual machine, from the console
in the title menu choose CD > Use Physical Drive D: (or whatever your cd rom
letter is…

a).NOTE: It is very important that you do this quickly before the Windows OS
starts booting. Just let it run; at the end it will show you your
password. Depending on the speed of your machine and the size of
the virtual hard drive, it may take between 15 to 40 minutes or so.

b). In some Computers when you run the Ophcrack, the graphical mode some how
freezes the console. So you have to choose the text mode instead.

5. Finally, be pacient and cross your fingers.

It works for me !!!!