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KVM, Kernel Virtual Machine, is a hypervisor built right into the 2.6 kernel for kernels later than 2.6.20. It is similar to Xen in purpose but much simpler to get running. To start using using the hypervisor, just load the appropriate kvm modules and the hypervisor is up. As with Xen's full virtualization, in order for KVM to work, you must have a processor that supports Intel's VT extensions or AMD's Pacifica extensions.

• KVM's wiki

[edit] Get the packages

Right now the packages required to get this running are in testing. It is assumed that relatively soon they will hit the main repository. So for those early adopters, please just enable the testing repository and download the updates. The kernel required is kernel >= 2.6.22-1, and qemu >= 0.9.0-4

pacman -Sy kernel26 qemu

After you have booted into kernel 2.6.22, modprobe these two modules: kvm and kvm-intel' if you have Intel extensions, and kvm-amd if you have AMD extensions.

modprobe kvm
modprobe kvm-intel

If you want these modules to persist, add them to rc.conf

[edit] How to setup Windows XP

First we need a place to install qemu. If you would like Windows to have its own partition, then skip this next step. This command creates a drive image that will grow as required. COW stands for copy-on-write. Specify the file size required afterwards. The example is a 5 gig image.

qemu-img create -f qcow2 windows_xp.img 5G