First of all, you should know that XP Mode is only part of Windows 7 Professoinal or Ultimate.  If you have the Home Premium version, you will have to look at other virtualized XP options (see the end of the article)

There are pros and cons to using XP Mode, but if you do your homework properly, it can be a real life saver.  You may have a program that only works in XP, and there is no update for it yet.  We have found that many industry-specific programs have not make the leap to Vista or Windows 7 yet. 

XP Mode Advantages…
– It allows you to run XP apps on Windows 7
– It allows you to run multiple versions of incompatible software
– It is integrated and launches seamlessly
– It provides a way to run 32-bit apps on a 64-bit operating system
– You can easily delete it and reinstall it (in case of a virus infection)
– Windows XP License is automatically included

XP Mode Limitations…
– It is resource intensive (uses lots of CPU and RAM)
– It needs a CPU with virtualization technology
– It is slow… up to a minute or two to launch the first time

XP Mode Alternatives…
– Virtual PC 2007 from Microsoft
– xVM Virtual Box from Sun
– VMWare

To use any of the above alternatives, you will require an XP License and installation CD to get it up and running.  One benefit is that these programs will allow for multiple installations of XP (or older Windows versions) and even Linux.

Of course, if this project seems a bit out of your technical realm, please feel free to bring in your system and we can do it for you.  We can even help you decide what solutions is the best for you.