I've got a couple questions about Virtual PC...?

If you install ubuntu (or any other OS) inside a VM, your files will not be touched. As far as the OS and programs are concerned it is a new machine. There will be some stuff shared, like internet connection, but your files on the real hard drive will be fine. All of the VM data will be stored in 1 virtual hard drive file. So to blow away the VM all you have to do is delete the virtual hard drive file (.vhd).