Virtual PC 2007 virtual machines are file based and the file extension is "VMC." VPC '07 virtual machines do not include storage. The VMC file basically sets the parameters that virtualize a diskless motherboard. Then, you point the VMC file at another file...the one that represents the storage. Here, in this second screen of the new virtual machine wizard, the user is given the choice of building a newly configured VM from scratch (with custom settings), quickly creating a virtual machine with Virtual PC's user configurable defaults, or registering an existing VMC file with the console; one that the console isn't already aware of.
For David Berlind's write-up on The Virtual PC 2007 Installation Sequence, see his post
in ZDNet's TestBed blog.