You know I am not sure. I haven't had much time to play with XP Mode as much as I like too. It works wonders for my old scanner which is about all I use it for but I do have to launch the VM to scan but the application I use is installed natively on Windows 7 so I would have to say it is somehow communicating between the host OS and the VM. Of course that is using a USB port and the hardware virtualization is taking care of that.