I had an old virtual machine which was originally created on VPC2004.  After I upgraded to VPC2007 I then tried to updgrade the vmadditions in the VM which was running Windows XP.  It would not upgrade as it could not find the source files of the old version to do the uninstall from.  Note to self: Best practice is to remove vmadditions before moving the VM to a newer version of Virtual PC. 

Luckily I still had VPC 2004 on another machine so I copied the vmadditions.iso file from there over to my machine with VPC 2007, booted up the VM, created a shared folder to the "old" vmadditions and ran setup to do the uninstall.  Once that was done I removed the shared folder and rebooted the vm.  The Windows XP vm booted up fine, I logged on and then did "Install and update virtual machine additions" and finally I had the updated vmadditions installed on my VM.

Closed the VM with "Commit Changes to the Virtual Harddisk" as i didnt want to have to do it all over again :-)

Went for a well earned Startbucks coffee!!