Microsoft has released a patch to remove the Hardware Virtualization requirement to run the Windows XP mode in Windows 7.
Whenever you install Windows XP mode on your Windows 7 system, you usually got one of the following errors:
Windows Virtual PC cannot start because this computer does not support hardware-assisted virtualization
Unable to start Windows Virtual PC because hardware-assisted virtualization is disabled
That means there a issue about Virtualization in your system.
In order to run Windows Virtual PC or Windows XP Mode in Windows 7, you must have a Virtualization supported System. To resolve from this issue, Microsoft has released a update called KB 977206. By Installing this update you can use Windows XP mode feature in your Windows 7 without Virtualization support.