Running Windows XP in Virtual PC might be similar to running applications in Classic OS 9 -- that is to say that even though you're working in PD in Windows XP, OSX is communicating with the hardware. For example, hardware that works in OS 9 but does not work in OS X, will not work in OS 9 classic. That's because - while you're working in OS 9 - OS 9 drivers are responsible for communicating with the hardware. However, when you're working in OS 9 classic, OS X is responsible for dealing with the hardware. (That's why it's such a pain in everybody's *#!&& that hardware manufacturers haven't developed drivers for OS X yet! ) In most cases, where OS X drivers haven't been created, you're forced to reboot into OS 9 to scan a photo or print your favourite appleworks spreadsheet - even though you might have Photoshop 7 and Appleworks for OS X! If your scanner or printer don't have native OS X drivers, then the only chance you'll have of using that hardware successfully is to reboot into OS 9 -- forget all about "Classic mode".

Hence, the difficulties you face using Windows XP in Virtual PC are perhaps caused by OS X and the fact that OS X is communicating with the hardware "on behalf of" virtual PC. That is to say that if you had a REAL PC with Windows XP and did everything exactly as you've done them, it might work like a charm.