I finally gave up this week. My main VPCs were getting pretty slow and I had an real annnoying VPC issue to boot. If I have a VPC running when the laptop went into hibernation the VPC for all practical purposes failed to run once the laptop came out of hibernation. Well to fair and honest the VPCs would run, it would just not redraw the VPC screen. To get a redraw I would need to minimize the VPC and then restore the screen. A host reboot is required to get the VPCs to function correctly.
I finally gave up and tracked down the VPC issue. If you have been experiencing the same symptoms take a look at this KB article:
Virtual PC 2004 and any virtual machines may stop responding after the computer resumes from hibernation
So before I updated my VPC with the hotfix I decided to defrag and compact my virtual hard drives (.vhd). Check out this post to Create LEAN_AND_MEAN Virtual Hard Disk (.vhd) Files
I followed this post and defragmented my vhd from inside the Virtual PC then ran the Precompact process. Precompact process can be run by mounting the PreCompact.iso located in the VPC install directory. Next I shut down the VPC and used the Virtual PC Disk Wizard to compact the drive. And regained about 1.5-2 gigs of space.
With a defragged, precompacted, compacted vhd I applied the hotfix and rebooted the host machine
Here are a few other links I ran into that gives tips to improve your VPC performance.
Improving Virtual PC /Server Performance