Can my operating system be a VM?

This isn't a server question per se,

but I wonder if I can have my operating system be, more or less, a VM. Right now, I have Windows XP, and run linux (most of the time) in VMware. I would just switch to linux, but I like being able to switch back and forth, and I need Windows for a lot of things.

I guess I could just run Windows in the VM, but that would basically just be the same thing, in reverse. What I would really like to do is to have both of them (and maybe moar in the future) in a virtual machine, and never use the host OS. Of course, as it is now, Windows is using a lot of its own resources--and the virtual hard drive is on the same hard drive as Windows, so everything is just... Slow and muddy. It'd be nice to have a really quick OS that only runs the VM, and doesn't do anything else but provide virtualization for the other operating systems. It would make dual booting incredibly easy, as well as installing new operating systems, and the like. Plus you could quick-switch between two or three different environments, or boot one while you use the other, etc.

Is there an OS suitable for this task? Is there a VM suitable for this task? I mean, it'd be nice if the host didn't have to load up it's whole graphical environment and could just load the VM into a command-line sort of interface... Can this be done with existing (preferably free) software?

VMWare ESX or ESXi (free) is what you want. You'll need two computers for ESXi, as VMs can only be accessed remotely through the VI client.

Another potential solution to look at is the Xen 3.4 hypervisor

ESXi and Hyper-V Server basically does that... but both leaves you with no local graphical console to the guests (only command line) - you need to run a remote console to get any graphical interface to the guests - and that will not be accelerated enough for gaming and stuff, not right now anyway.

I think the answer you are leading to is yes.

Yes, you can install VMWare, VirtualPC or VirtualBox under Windows or you can install Xen or other under Linux.

However, you should really look at your needs in both systems. If you are playing a lot of games, it is likely you want to run your linux under windows. If you are not, it may be possible with Wine to remove Windows from the equation altogether.