Just to add a few updates to this writeup from my experience:
Step 9) in the PDF should really be replaced with the following notes from Phil with the cable mentioned because at this point you have not setup the drivers for the cable in Windows 7 and in the XP Virtual Machine.
Step 11. Connect the cable via USB first to preload the drivers. Then you can plug into the car. When you first connect the cable, windows 7 will recognize it and install drivers automagically. After that, select USB from the XP VM Window tool bar, and attach the k dcan cable. Now when windows xp sees it and wants drivers, select not this time, then install from specific location and point it to the folder where you've extracted the drivers from above.
From my experience, during the installation of the drivers in the XP VM, I was prompted twice to install the USB Serial Port as well as the USB Serial Converter.
After installing the proper drivers in the XP VM, you can start up the Device Manager. Select Ports and you should see USB Serial Port (COMx). You need to change the USB Serial Port to use COM1. In order to do so, you will have to change Communications Port (COM1) to use another COM. So select the Communications Port (COM1) and go to its properties. Select the Port Settings tab and click on the Advanced button. Here, you can select a different COM port under the COM Port Number dropdown list. Click OK, then OK. Now go to the properties of the USB Serial Port (COMx). Select the Port Settings tab and click on Advanced. Change the COM Port Number to use COM1. Then find the Latency Timer (msec) dropdown and select 1. Click OK, then OK.
You can then proceed to the next step.
If you want to speed up your Virtual Machine, make sure you enable Integration Features. Even though I had Integration Features enabled in my XP VM it was still really slow. I did some searching and found that there is an xml file that you can edit to help improve your VM. First, make sure you shut down all VMs. Then navigate to the following directory: C:\Users\<your user profile>\AppData\Local\Microsoft\Windows Virtual PC\Options.xml
I added the following item in bold: