One of the problems when you want to run a virtualized version of CRM 2011 on Windows 7 is that virtual pc does not support 64bit operating systems and virtual server does not run on Windows 7 not at least without some hacks.
When I was faced with this problem I toyed with the ideal of installing Windows Sever 2008 and Hyper V however I decided to give VMware Player a go. I must admit I was presently surprised with how easy it was to get up and running and natting worked without any configuration. Added bonus is that it is free. I would definitely recommend it.
If you have existing VHD images that you want to convert to a VMWare
VMDK virtual hard disk then I would recommend wimimage which allows you mount hard disk images and converts them. http://www.winimage.com/
I believe VirtualBox is also a good tool but I have not had a chance to try that yet.
