Has anyone successfully installed powermill in vista or windows7? I just get an error message," Powermill can not operate in virtual pc. I get a different message when I try to install Surfcam. That one says that there is a directx or hardware acceleration layer issue. Any ideas?

It's not vista or Windows 7. It's Virtual PC. They only emulate the video and will not support 3d stuff. If you want to run it in those environments, you'll need to install the OS on a hard drive. Not a virtual disk.