That's it, hours of googling, and I found the solution for myself.
Edit: I've also noticed that if I have the VFD (Virtual Floppy Drive) driver loaded it sometimes fails to boot.
Normally this requires leaving a boot floppy in the A: drive and using it as the boot device. If trying to boot from the hard disk, Virtual PC hangs just after POST when the boot block is read. Here is how to overcome this problem...
That's it, hours of googling, and I found the solution for myself.
Edit: I've also noticed that if I have the VFD (Virtual Floppy Drive) driver loaded it sometimes fails to boot.