This topic was posted in another forum, but it bears echoing here:
Not all Intel CPUs support virtualization. Just because you have a dual core or a quad core Intel processor doesn't mean it can run a VM host environment. This includes the XP mode in Windows 7. All AMD processors, however, do support virtualization.
These Ed Bott articles explain the problem and list the Intel CPUs that do and don't support Intel Virtualization Technology (Intel VT):
Can your Intel CPU handle Windows 7’s XP Mode? | Ed Bott’s Windows Expertise |How many Intel CPUs will fail the XP Mode test in Windows 7? | Ed Bott’s Microsoft Report | ZDNet.com
It's also worth noting that many computer are shipped with virtualization disabled by default in the BIOS. So if you are getting a "virtualization not supported" error message, check your BIOS settings first.