Ah. I'm fairly positive that the problem may be arising because the Virtual PC's emulation isn't capable of giving DirectRT full access to the machine's (non-virtual) graphics hardware. If this is the case, there isn't much that can be done, other than reformatting the machine to Windows XP or installing the 2010 version of DirectRT. The 2010 version won't experience the same incompatibilities with Windows 7 that our previous versions do.

Are you currently running DirectRT 2008? Btw - thank you for posting your DxDiag file. It's very helpful to have as many resources as possible, provided.