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Infrastructure & Hosting 
When using the new Windows 7 Windows XP Mode (or running any other Virtual Machine in the new Virtual PC version), you might run into the following error if you try to start some setup located on a external USB or network drive:
“The Windows Installer does not permit installation from a Remote Desktop Connection”
This is because the new Integration Features map your drives in the same way Remote Desktop does.
When you allow access to your local C:, it sees it as \TSClientc and the Windows installer disallows installs from anything in the \TSClient namespace.
So the solution is to first copy all the setup files into the virtual environment and then run the setup!