Virtual PC is free for Windows 7 Professional and Windows 7 Ultimate. For many other OSes including different versions of Windows you may use freeware Virtual Box.

Also when removing DRM protection from videos, you can use screen video capture software instead of DRM removal software. The former is more universal and in most cases you won't even notice any disadvantages in using it unless you use lossless DRm removal software like freeme2 and FairUse4WM.

Replay Video Capture / WM Capture use Universal audio driver, so you shouldn't have any problems recording sound with them on Windows 7.