Application Integration Mode within Windows 7 ("Windows XP Mode")

Application Integration Mode within Windows 7 ("Windows XP Mode")

I'm having an issue where applications that are virtualized (on VMs using Windows XP SP3 --not XP Mode, just regular Virtual PC) and accessible by my host machine (Windows 7 Enterprise x64) are just hanging during normal use or moving very slowly. When accessing them using traditional VM, it's working fine. Any ideas why? An example is Outlook 2010. When it attempts to sync, it locks up for 20+ minutes.