I had been trying to get virtual pc 2004 to install linux for some time and no matter what distribution i chose, i always got a kernel panic error about 10-15 seconds into the install. Well i finally found the solution to this problem. Install service pack 1 for virtual pc 2004. It is available from microsofts website here: http://www.microsoft.com/downloads/details.aspx?FamilyID=b07c9ef0-265a-4237-ae3b-25bc8937d40f&displaylang=en
I hope this helps others if you have this same probem. :)