Can you install Ubuntu Server in a Windows PC VM on Windows 7?

I would recommend using VirtualBox instead. Windows Virtual PC was designed with only Windows in mind, but with VirtualBox, you can install any OS you want. I've been running Ubuntu on it without any problems.

There is currently no Virtual PC Extensions for Linux available for the new Virtual PC, however it has been mentioned that the Hyper-V extensions might possibly work. However Microsoft mainly support SUSE Linux and RedHat based server OS's and not the desktop editions. The current extensions are only available for Virtual Server 2005 and Hyper-V.

I have to agree with musicfreak's recommendation of VirtualBox. It is the best VM manager to run Linux with. However Hyper-V with a RedHat or CentOS installation is not to bad.

It's memory... I had all the same errors as the others until I bumped the memory of the Ubuntu Virtual PC to 1024 instead of the default 512M. Looks good...

I'm running Ubuntu Server under Windows 7 7100 host, in VMWare 6. Works great.