[CedarDave]

Please explain what the difference between host and guest means. If I have Vista Home, can I run XP Home on the same machine?

[Echo Talon]

you need Vista Ultimate or Business to run a VM... OR Win XP PRO...

[antiRepublicrat]

If I have Vista Home, can I run XP Home on the same machine?

Microsoft has decided that you can't run Vista Home as either the host or guest (the host is your normally installed OS, the guest is what runs in a virtual computer under your host). It's not a technical limitation, just that Microsoft doesn't want you to.