Yes. Nowhere near as good as VMware. It works ok for running Windoze as a virtual machine, but it's crap at running anything else. If you just want to run XP, I'm sure it'll be just fine.
You know what they say about Microsoft... the only time they give stuff away for free is if it's a) so crap that noone would pay for it, or b) part of a strategy to kill off a competitor with a superior offering.