VMWare

Great tool I use to test my software on different operating systems. Currently I have a ME, 2000 and XP virtual server for testing Windows apps.

There is a FREE vmware player here:
http://www.vmware.com/products/player/

but you have to already have the vmware image to run an OS.

Here is more info on vmware:

VMware Workstation is powerful desktop virtualization software for software developers, software testers, and enterprise IT professionals. Workstation allows users to run multiple x86-based operating systems, including Windows, Linux, NetWare, and Solaris x86, and their applications simultaneously on a single PC in fully networked, portable virtual machines — no rebooting or hard drive partitioning required.

http://www.vmware.com/products/ws/

[brackett]

If you want to use the VMWare Player, you can build your own images using the online VMX builder. Or, you can use a Windows version (look for VMX Builder).
Of course, now that VMWare Server (beta) is free, I'm not sure that there's all that many reasons for a developer or power user to go with Player.