Hi Ted,
This issue occurs when the hibernation file for your virtual machine gets corrupted. For Windows Virtual PC (the version that comes with Windows 7), the default action for close is Hibernate.Hiberfil.sys is a snap-shot of the state of your computer that is taken by windows when it becomes inactive. However, virtual machines don't store their hibernation files in hiberfil.sys like a physical Windows system does. The hibernation file for a virtual machine is referred asthe storage of the current state of the virtual machine. So the hibernation file for Windows Virtual Machine is stored in the following location which has a file extension***.vsv**
C:\Users\ (Username)\ AppData\Local\Microsoft\Windows Virtual PC\Virtual Machines directory
I: To rename the file *.vsv, follow the steps mentioned below.
1. Click on Start and click on computer.
2. Go to the following location:
C:\Users\ (Username)\ AppData\Local\Microsoft\Windows Virtual PC\Virtual Machines directory
3. You’ll find a .VSV file in the Virtual Machines Directory.
4. Rename the file.
For example: If the file name is VM.vsv, rename it toVM.old
5. Close all the windows and restart Virtual Machine. You should be able to run it without having any problem.
In order to prevent this problem from happening in the future, you can do a shutdown of the Virtual PC rather than the default hibernation.
II: Steps to change the option from "hibernate" to "shutdown" on your Windows Virtual PC
1. Open Virtual PC.
2. Click on Tools and then click on Settings.
3. Under the Close tab, change the option from Hibernateto shutdown.
4. Restart your computer and start your Virtual PC for the changes to take effect.
By the way, what happens when you try to install Windows Updates for your Windows 7 PC?
Do you receive any error messages while installing updates?
I would suggest you to put the computer into a clean boot and then try installing updates to see if you’re able to install the updates successfully. To put the computer into a clean boot, follow the steps in the link below.
III: Perform a clean boot**http://support.microsoft.com/kb/929135**Note: Once the troubleshooting is done, do not forget to reset the computer back to normal startup.
Hope this information is helpful.
Mouneshwar R – Microsoft Support
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