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I've been doing Desktop and Server virtualization since about 1998, so I'll answer as many of your questions as I can, someone else can chime in with those that I may not expand upon, or give you enough information on. Not sure what your level of expertise is, based on the questions asked I'll assume none so please don't be offended if it appears I'm 'talking down' to you, I assure you that's not my intent.

1. Out of the free versions of virtualization software what do you recommend that is as safe, secure, and reliable as VMWare Workstation that can be installed on a PC?
I use VMWare Workstation for my basic virtualization needs at home. It's very reliable and has features that allow you to 'undo' your mistakes, as well as give a virtual machine more CPU or Memory to improve its performance. I've tried some of the Open Source stuff that's out there, they don't compare to VMWare IMO. (Others may disagree here, at this point it's all "preference" though.)

2. Is the "host" the operating system on which VMWare Workstation is installed (in my case it will be Win 7 Ultimate 64 bit)?
VMWare Workstation comes in 32 and 64 bit. If you're running Windows 7 in 64 bit mode, you'll see the best performance with VMWare Workstation 64 bit.

3. Would you call a virtual machine a "client?"
It's called a virtual machine.

4. Can I have Windows 7 Ultimate 64 bit as the host (on which I install VMWare Workstation) AND install Windows XP Pro 32 bit as a virtual machine? In other words, can 32 bit and 64 bit operating systems exist on the same PC using virtualization?
In Windows7 you actually have two options. The first is you can download the Microsoft Virtual XP machine for Windows7 and install that, OR you can install VMWare Workstation and then build your own WindowsXP image. Speaking solely from my preference, I installed VMWare Workstation then built my own WindowsXP virtual machine. It's fairly easily done with VMWare Workstation.

5. Can I have Windows 7 Ultimate 64 bit as the host (on which I install VMWare Workstation) AND install either Ubuntu 64 or 32 bit as a virtual machine?
Absolutely. 6. What is a "hypervisor?"
Wikipedia an excellent description of a Hypervisor and what it does. so I won't re-invent the wheel here.

7. Which is better? Having a dual-boot setup or using virtual machines?
The answer to this question is really based on what your needs are. Do you have a need to run more than one O/S at a time? If so, then Virtual Machines are the answer. If not, and if you want to get the maximum CPU, Memory and disk performance on your machine, then dual-boot is a good answer. It really depends on what you want to do. Note that there is a small performance hit with Virtual Machines which is largely dependent on the number of cpu cores in your machine, amount of memory, speed of disk, etc.. As a general rule, the performance hit of a virtual machine is about 10-15%. Some will claim that the performance penalty is lower, but what I'm citing is a general rule of thumb.

8. Is it possible to create a copy of a virtual machine and on it install different software? For example, suppose I have Windows 7 as the host and I install Office 2007 on it. Can I create a virtual machine that consists of Windows 7 and Office 2010? Then, at some point, make the Windows 7 with Office 2010 the host instead of a virtual machine?
You're thinking ahead, and this is a really good question. The great thing about virtual machines is, you can make as many copies of them as you want! I keep a "master copy" of all my virtual machines on a separate USB drive and copy them to my machine as needed. The 'master copy' of my machines contains the basic OS with only the features I want installed such as MS Office, some chat clients and other common software I'd normally use in them. What I do not keep in them is the anti-virus or anti-spyware tools as I install the most recent copies of them when I copy the virtual machine over.

9. Is it possible to restore a PC with a copy of a virtual machine?
Typically you need an original image of your system that can restore the boot sector and then the image first. I use Altiris to image my PC, so I can restore my PC quickly. Virtual machines can be copied back from a separate USB (1 Terrabyte) drive that I keep my virtual machines on. (Note: It's always a good practice to have a DVD backup of your virtual images too.)

10. How would you backup and restore a virtual machine?
I assume you mean that you want to keep changes to your virtual machine with this question. The answer to that is simple: Shut down the Virtual Machine (assumption: it's a VMWare virtual machine) then backup the directory that contains the virtual machine files to tape, dvd or a separate USB disk drive. If you want to just backup the DATA within the virtual machine, then you'll need to leave the virtual machine up and running so that you can backup the data from it to a separate USB disk drive, dvd, etc..

11. If I have a virtual machine and I access files on the "C" drive do all of the virtual machines have access to the same files on the "C" drive? Say, for example, I create a Word document and save it to the hard drive as a .doc file. Then I open a virtual machine consisting of Ubuntu and Open Office. Can I open the same document and navigate to it in the same way? In other words, is the file always accessible to all virtual machines as though the path is the same?
You're mixing two questions here, so let me try the first. If you have files on your "C:" drive that you want to share with other virtual machines of the same OS type (say, Windows 7 as the host machine and Windows XP as the virtual machine) then you'll need to setup a shared folder in VMWare workstation that both machines can see, to share files. This is easily done with VMWare Workstation. You can also just setup normal "shared folders" on both the host and client machine like you would with two pc's networked together and do it that way as well. I prefer setting up the shared folder in VMWare Workstation, but again this is a preference. There are two equally legitimate ways to do this task.

The second question was about sharing files between say Windows7 as the host machine, and Ubuntu as the 'virtual' machine. Again, there's two ways to do this. One is with the shared folder in VMWare Workstation. The other method would be to setup SAMBA on the Ubuntu virtual machine and export the folder so the Windows host machine could see it just as it would across a network. Both methods work, my preference is the VMWare shared folder because it's just faster.

12. I have multiple users on the PC and Windows XP is set up with a separate login for each family member. Would I continue doing this or perhaps create a virtual machine for each person?
Another great question and again it depends on what your wants/needs are here. You can certainly give them their own login's to the machine which would create their own folders on the Windows machine and allow them to share data with each other if you give each user permission to do so.

If you setup a virtual machine for each user, you'd need to create a login script for them in Windows to have it launch the virtual machine for them once they login. This gives each user of your machine their own "machine" and environment, HOWEVER you'll need to maintain each virtual machine for each user (think anti-virus updates, spyware updates, scanning, defragging, etc..) It's an interesting proposition setting up a VM for each user, but it seems to me it'd be a maintenance nightmare for you and you may be better off just giving each their own logon. Hopefully I gave you some food for thought here.

13. Do virtual machines share software? For example, If I have Windows 7 Ultimate and Office 2007 installed and running as the host and I create a virtual machine running Windows XP would I have to reinstall Office 2007 in this virtual machine?
Good question. The answer is you need to install whatever software you want to use inside each virtual machine, as they cannot share software between them. (See my answer above regarding making 'master copies' of virtual machines with the most common software components you use and then just copying and modifying them as needed later.)

14. Can I make a copy of a virtual machine and then install additional software on it to make sure that it is compatible and that no problems occur with the new software, if there are problems revert back to the original virtual machine?
Great question! This is the most common use for Virtual machines, ie: test boxes. For years I've routinely tested WindowsXP patches and hotfixes on my virtual XP machine before I put them "live" on my actual desktop. Just remember to keep an original 'master copy' on dvd/usb drive to revert back to, or use VMWare's rollback function.

15. Are the virtual machines running on partitions and if so what about drive mapping considerations?
On a Windows7 machine such as you're going to run, Virtual Machines reside in their own directories, not partitions. Unless you're going to be running Virtual Machines from a network drive or a removable USB drive, there are no drive mapping considerations. If you *do* run a Virtual Machine from a removable or network drive, you'll need to execute the VM from that drive/directory. Easy peasy.

16. Do you have any recommendations? Are there any questions I haven’t thought of but should have?
I'll let you know if I think of any, but so far you're asking all the right ones. Tells me you're thinking this through pretty well. If you have others drop me a freepmail.

17. Can a copy of a virtual machine essentially serve as a backup of the virtual machine?
Yes, answered above. (Keep a master copy on a DVD or USB drive for safekeeping.)

18. Is it possible to remote-desktop into a virtual machine?
Absolutely, and there's a number of ways to do it. If the virtual machine is Windows XP, you can use Windows Remote Desktop, VNC works well too. Whichever you're most comfortable with. I do something a little different in that all my XP virtual machines have remote desktop available via a web browser. I can connect to any of them from my home network or remotely through my high speed connection and a web page that front ends my login to them. I simply pick the machine I want from a web page and login to them. Each of these methods is well supported and fairly simple to do. Documentation on how to do this is readily available on VMWare's site, or any number of virtualization user groups on the net via google search.

19. What can you tell me about VirtualBox: http://www.virtualbox.org/ Is it as good as VMWare Worskstation or is it only for servers?
I have to let someone else answer this one as it's been awhile since I've looked at VirtualBox. At the time I looked at it, it wasn't as full featured and easy to use as VMWare. If you're a geek and like to tinker and have patience, try VirtualBox. If you want something that "just works" then go for VMWware Workstation. (Note: I've used VMWare since 1998 in both Workstation and Server forms, so I may be a little biased here.)

20. I'm also thinking about installing VNC or some other remote desktop software so that I can login to my PC from remote locations.
VNC or Windows built in remote desktop works just fine.

1. VNC has been around for quite awhile and it is free. Is it safe?
VNC is safe as long as you do not allow external (internet) access to your physical or virtual machines. As long as you don't directly open the ports for VNC on your home router, you're fine. VNC sends information in clear text across the network which you don't want someone from the outside (ie: internet) seeing. You can also purchase a copy that uses SSL encryption which would make it safe to remote to your machines across the internet, and encrypt your traffic. (Note: The above is an over-simplification of a technical issue in which one needs to encrypt their data on the internet and protect themselves. The bottom line is this: If you plan on accessing your physical or virtual machines via the Internet, make sure you use a secure client that uses SSL or other well known encryption to protect yourself from getting hacked, and your data from being seen.)

2. What remote desktop software do you suggest (freeware or paid)?
Depends on what you're going to do. If you're only going to access your VM's from your home network and you do not open up your firewall or router to allow outside traffic to directly access your machines, then the free version of VNC or windows Remote Desktop is fine. If you're going to access your physical or virtual machines via the internet, find good software that uses SSL or other encryption and use that (paid or otherwise.)

3. Are there other freeware versions that I should consider other than VNC or would it be safer to purchase this type of software? If I should purchase remote desktop access software which version should I buy?
There's alot of good, free remote desktop software out there, consider what I said above on how you intend to use it and from where (ie: your own network, or accessing your machines via the internet.)

Sorry for the length, but you asked some very good questions and I wanted to answer you as fully as I could without getting too technical. Hope you found this useful. :-)