Problem with Single-Step INT1 on Virtual PC XP Mode

[RedBlkJck]

Has anyone come across this message of single step INT1 just start occurring on a VM host machine? This behavior reminds me of how Olly1 acted under Wow64 with out the patch but this is XP Mode 32bit.

Olly2: Break on single-step trap or INT1 set by application - Shift+Run/Step to pass exception to the program.
The exception can not be passed, options are enabled. Setting permanent system BP will now reach the entry point but the entry point will error as corrupt BP. App crashes whether Packed or Unpacked

Olly1: Reaches entry point but can not pass along the exceptions. App crashes when packed but loads fine unpacked.

Win 7 Pro 64 bit with the default VPC XP Mode vhd. The app shouldn't matter but I've been using my own PEC unpackme as a target. It crashes Olly 1&2 packed or unpacked like all other apps. Apps run fine without the debugger attached. So I restored a fresh image of XP Mode that is clean with no software installed. Downloaded a fresh copy of Olly and the same results. So I assume this is being caused by the host running the VM. I didn't change anything that I am aware of and running out of ideas. Any ideas on what would affect the virtual machine like this? Before I trash this Win 7 install thought maybe I'm just over looking something simple... Thanks