I just found this gem (again) and didn’t want to lose it this time.
If you don’t like that Virtual PC uses C:\Documents and Settings<profile>\My Documents\My Virtual Machines as the default location for its Virtual Hard Disk files, then you need to do this:
- On the host computer, right-click My Computer, and then click Properties.
- Click the Advanced tab, and then click Settings under Environmental Variables.
- Under System variables, click New.
- In the Variable Name box, type myvirtualmachines.
- In the Variable Value box, type the path of the folder that you want to use.
- Click OK two times, and then close the Computer Management window.
(Taken from MSKB)