Does the Virtual PC XP Mode need safety measures?

"Yes. In essence, It is still just regular old virtualization, same as used in VMWare or VirualBox. Just because they share the same start menu items, does not make it any less (or more) secure.

You should always be taking the appropriate measures and cautions as with anything else. If you use antivirus, install it on both the host and guest OS."

I contacted Microsoft last week and asked them about the potential risks of using Windows XP Mode. They replied saying that due how it's implemented, the risk of malware breaking out of the VM is 'very unlikely'. They didn't go into further details, though.

"Using Windows 7 pro with xpvm, I have a lot of problems.
The biggest is FINDING an antivirus that works.
On the win 7 main, I can use Norton 360, but now have removed that in favor of microsoft essentials (MSE).
I think that still requires malwarebytes, but careful to interact a malware scan in win 7.

In xpvm one antivirus would not even download, another seemed to work at first but after several hours came to a stop, very slow I think interacting with Norton 360 in the main.

So that got honked up to the point I had to uninstall the antivirus, then malwarebytes removed 118 files associated with something and that required some ingenuity to get my new Dell 64 bit machine back up. Now looking for a restore disk set.

Then I removed Norton360 and added MSE. At this point I will run XPVM as little as possible without antivirus since MSE doesn't support XP.
That means to me, keep it off the internet."