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First off, I believe it requires Windows 7 pro, enterprise or ultimate.
Visit http://www.microsoft.com/windows/virtual-pc/download.aspx and go though their process to get the downloads. There will be three in all (but one of them is only needed if you don't have SP1, it says which underneath).
Install all the things it tells you to install, and you'll have to reset your computer at various times.
Once you go though all of that, you'll have a new folder in your start menu called Windows Virtual PC. Open that up and run Windows XP Mode.
There will be a little setup that you should just handle normally, and then you'll have windows XP running in a window in Windows 7.
Inside your new XP window, install Castle and be sure to put a shortcut to the program's exe file in C:\Documents and Settings\All Users\Start Menu\Programs
The shortcut has to be RIGHT THERE it cannot be in another folder deep or in a different user other than "All Users". It really has to be right there.
Now, you could just play castle though this windows XP mode thing, and not worry about the shortcut, but if you do put the shortcut, you can actually run castle though windows 7!
To do this, close xp mode and go back into your start menu. If the shortcut is in the right place, you'll have another folder in the Windows Virtual PC folder called Windows XP Mode Applications. And you'll find your XP shortcut right there. If XP Mode is closed, you can click that, and it will run in windows 7.