Played around some more and found a way to get Windows XP Home installed and working, though I still get the firmware disabled message.
For others trying this here is what I did:
I restarted the process setting up a Win XP install this time, with no unusual settings other than defaults in the wizard. I set the boot to go from CDROM first rather than HD. Saved settings. Inserted the XP Home (Upgrade) CD. Clicked the green start triangle, and this time it started the install. At some point it asks to have you insert a valid Win 95 or Win 98 install disk (since this was an XP Home Upgrade disk). I needed to take control of the cursor (Ctrl-Alt) and used the disk icon at the lower part of the window to disconnect the CDROM. I could then see it on the desktop and eject it. I then inserted a Win 95 Install disk, and used that same icon to Connect it, clicked on the windows install window, and told it to proceed. Well that didn't work since it somehow didn't recognize my Win 95 Install disk that came with Virtual PC. So I proceeded to eject that one and inserted a Win 98 Upgrade disk and it accepted that. It then proceeded to nicely install XP Home. The time it projected was much more than it actually took...about 3x faster. After shutting down win xp, I then updated the VM to have more memory and to boot from HD first...saved then restarted with no issues. I used the Windows display control panel to set my screen size to a larger 1280x960. All seems to be functional, so I guess my next step is to find a virus program cheaply before this thing gets infected...heard the life is only 20 minutes without a windoz condom.
Just a start, but I am very impressed I got this far!