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Computerworld - Microsoft Corp. today delivered the release candidate of Windows XP Mode, but at the same time downplayed the Windows 7 add-on, saying it was a last resort for customers who want to run old software in the new operating system.

Announced last April and issued as a beta several weeks later, XP Mode creates a virtual environment using Virtual PC, Microsoft's client virtualization technology, then stuffs it with a pre-activated licensed copy of Windows XP Service Pack 3 (SP3), the current version of the 8-year-old operating system. Users can launch XP applications within the virtual machine from the Windows 7 desktop, and those programs appear in Windows 7 windows, rather than in a windowed virtual machine.

But while today's XP Mode Release Candidate (RC) includes several improvements over the beta, including the ability to connect to USB devices directly from the Windows 7 toolbar and the option to disable file sharing between the two operating systems, Scott Woodgate, director of Windows enterprise and virtualization strategy, had bigger fish to fry.

"XP Mode is for those situations when users have tried [running XP applications] on all the other avenues," Woodgate said in an interview today. "It's the last mile for XP compatibility."

Woodgate acknowledged that Microsoft had not made that clear months ago when it unveiled XP Mode. "We always had that clearly in our minds, but we didn't articulate it to customers," he said. "Windows 7 is always going to be the better choice for running XP applications."

Many XP applications will run "just fine on Windows 7," Woodgate claimed. "The best experience will be running XP applications on Windows 7."

In a blog post announcing XP Mode RC this morning, Woodgate noted that many XP programs run in Windows Vista, and because Windows 7 uses the same underpinnings as its immediate predecessor, those applications should also run without problems in the new OS. "In most cases, we recommend running applications natively in Windows 7," Woodgate said in his post.

Woodgate denied that Microsoft was backing off recommending XP Mode because some analysts had criticized the virtual environment as a support nightmare that would require users and companies to manage two different operating systems, keeping both patched and running two separate copies of security software.

"[Our recommendations now] are more a result of users being confused," Woodgate said. "We never guessed that users would think they had to run every XP application in there."

Microsoft has pitched XP Mode primarily to small- and medium-sized businesses, and has promised to update MED-V (Microsoft Enterprise Desktop Virtualization) to help companies manage the XP virtual machines on workers' desktops. However, MED-V is available only to organizations that have a Software Assurance plan in place and also purchase Microsoft Desktop Optimization Pack (MDOP).