Mauricio Freitas blogs about the experiences gained by doing an Ubuntu install on Virtual PC.
Read it here
Back to my test, it looks like Ubuntu doesn't like Virtual PC because it runs on 24 bit per pixel and Virtual PC only supports 16 bit per pixel. The system boots from the live cd and the display goes completely distorted. I then tried on Virtual Server, but had the same result.
I did get a recommendation from one of the Geekzone users to look at a page from the Ubuntu website “How to Configure Ubuntu for Microsoft Virtual PC 2004″, but even following those recommendation I can't install Ubuntu under Virtual PC. Those instructions are for Ubuntu 6.06, and I have Ubuntu 6.10. Could be that the problem?