I am trying to install the windows server 2003 R2, which is basically an ISO image, in my virtual PC 2007. I came through this good articles
http://www.ehow.com/how_2060126_install-operating-system-microsoft-virtual.html
http://www.windowsnetworking.com/articles_tutorials/Installing-Configuring-Virtual-PC-Part2.html
it helped me until the virtual PC is setup. And one more thing i had selected Windows server 2003 in my operating system.Now the problem came here. When i try to install my winserver 2003 it didnt show anthing up. so i go to the Operating system options and in Boot i put CD option in top priorities and save it and exit.
Now after wards i go to the Option Of CD and the select Capture ISO Image option and then go straight to start option in virtual pc console. And here we go it started running operating system. and atlast i had setup and configure my operating system.