I was using VPC 2007 on Windows Vista Ultimate 32 bit for the first time last week. I was creating some user documentation for my new job. I noticed that even with sharing turned on for my C Drive I could not save any files from the VPC to my C Drive. I heard there was really no Vista and VPC 2007 support, so I decided to start experimenting as per usual (don't try this at home I have broken more VPC's than anyone within the SharePoint Community I bet). So I found this Public area on the C Drive under the Users. I saved the file in that directory and it actually worked. I am assuming that there is some kind of security issue with Vista and Virtual PC 2007. I know the security is a little wacky. I hope this helps someone out there. I will try to post little snippets from my trials a bit more in the next few weeks.