This answer by in this thread is working as of today: http://social.technet.microsoft.com/Forums/en-US/w7itprovirt/thread/aca326fd-8e37-49f3-8b90-4eda93a11cd6
Quoting the answer that matters:
1) I found out that .vmc and .vmcx files are NOT the same. If you found your .vmcx files, don't bother opening them up in a text editor for this issue. Instead, find the .vmc files (in Windows 7, they are found under C:\Users\\AppData\Local\Microsoft\Windows Virtual PC\Virtual Machines).
2) Shut down your virtual PC environment (I was using XP Mode). This was the step that I thought I could get around. I kept hibernating and making changes to the vmc file, but the changes did not work until after I completely shut down, made the changes to the .vmc file and booted back up.
3) As for what changes are necessary: If you are able to run the VBS script provided by SANDY.WADHWA [MSFT], good for you. If not, you can make the changes manually.
In the .vmc file, find the section:
<integration>
<microsoft>
<mouse>
<allow type="boolean">true</allow>
</mouse>
I made the changes manually by first adding the section:
<components>
<host_time_sync>
<enabled type="boolean">false</enabled>
</host_time_sync>
</components>
This was wrong for my XP Mode (it may work on a VPC 2007 environment, though, so give it a try).
Then, I removed the tags (NOTE: I did this as well, and this worked - you probably want to do this option):
<host_time_sync>
<enabled type="boolean">false</enabled>
</host_time_sync>
That allowed me to make a change to the time and date without it automatically reverting back every 5-10 seconds.
4) If you would like to prevent the VPC environment from synchronizing upon bootup, do put the following inside the tag:
<time_sync_at_boot type="boolean">false</time_sync_at_boot>
Again, keep in mind that you must SHUT DOWN the VPC in order for the changes in the .vmc file to take effect.
5) One last thing, if you go into the Date and Time Properties and click the Internet Time tab, uncheck the "Automatically synchronize with an Internet time server" checkbox.