With dual-boot, you get a real MS-DOS machine - so you can really do all the really ugly things that old MS-DOS programs loved to do, like directly hacking with the hardware.

These are the kinds of things that break when you move to a protected environment like NT (and its descendants, including XP) - because it just doesn't let you do that stuff.

Now, I don't know about these vmware/MS VirtualPC/etc thingies, but surely they cannot allow applications to really go directly hacking with the hardware? So, wouldn't this still be likely to break old MS-DOS apps that rely upon such things?

I don't know - I'm just asking...