The update is available as a download from Microsoft's Web site.

Previously, Windows 7 XP Mode required a PC equipped with hardware-assisted virtualization, such as Intel Virtualization Technology or AMD-V. But Microsoft's update eliminates that need.

"This change makes it extremely easy for businesses to use Windows XP Mode to address any application incompatibility roadblocks they might have in migrating to Windows 7," said LeBlanc. "Windows XP Mode will of course continue to use hardware virtualization technology if available," he added.

Microsoft did not provide details on how running XP Mode without a hardware boost would effect application performance. Most Windows XP apps will run natively in Windows 7, but some require XP mode for compatibility.

Microsoft is hoping the move will boost Windows 7 adoption by small- and mid-sized businesses. Most SMBs still use applications written for Windows XP, and many lack the higher-end PCs that were previously required to run Windows 7 XP Mode.

Microsoft recommended that larger companies wishing to make XP Mode available to their employees continue to use Microsoft Enterprise Desktop Virtualization (MED-V), which is included in the Microsoft Desktop Optimization Pack available to Software Assurance Subscribers.

"MED-V provides deployment and manageability features better fit to address the needs of the enterprise customer," said LeBlanc.

Microsoft introduced Windows 7 in October 2009. XP Mode is available only in the Professional and Ultimate versions of the OS.