Microsoft Windows 2000 and XP (and probably others) ship with a built-in network interface driver called the "Microsoft Loopback Adapter" that lets you create a local-only network interface device. This adapter can be extremely useful when you are doing development testing using Virtual PC and want to isolate your Virtual PC's from your main network.

For instance, let's say that you want to test a SharePoint Portal configuration with a separate front end web server, a separate index and job server, and a separate database server. Using Virtual PC you would configure the network adapter of your virtual machine to use the Microsoft Loopback Adapter for each virtual machine in your virtual server farm. When you spin up all of your virtual machine instances, they would only be able to communicate among themselves and any traffic would be isolated and limited to your testing environment.

To configure your Microsoft Loopback Adapter under Windows XP, do the following:

1. From the Control Panel, select "Add Hardware"
2. Select "Yes, I have already connected the hardware"
3. Select "Add a new hardware device" (at the bottom of the listbox)
4. Select "Install the hardware that I manually select from a list (Advanced)"
5. Select "Network adapters"
6. Select "Microsoft" as the manufacturer and "Microsoft Loopback Adapter" as the adapter

From within Virtual PC

1. Select your virtual machine
2. Go to the Settings (either right-click the VM and select "Settings" or from within a running instance go to the "Edit" menu and select "Settings)
3. Click the "Networking" setting
4. For your network adapter, select "Microsoft Loopback Adapter"

Now, you should be able to see your other running Virtual PC instances that also share the same loopback adapter!

Note: If you run into a problem where you can't select the Microsoft Loopback Adapter", you'll need to verify that 1) the "Virtual Machine Networking Services" are installed for the loopback adapter, and 2) if they are, and you still can't select the adapter, uninstall the service and then reinstall the service (by pointing to the Virtual PC installation directory under Utility/VMNetSrv).

Happy Virtual PC'ing!

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