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Of course you can. Google vmware server. It’s free.
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There are a number of virtualization solutions. As someone pointed out VMWare makes a nice solution. There are others Xen, and KVM to name a few. Google Linux and virtualization to get more information.
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Yes, many people do this, and the instructions are well set out in the Ubuntu forums at Ubuntu.com
It would be best to get a dvd of ubuntu 8.04 rather than stay with 7.04. I would suggest trying the 8.04 current edition from the dvd before installing it on your hard drive.
It is likewise important to make sure that your data disks are distinct from your program disks, and of course back up the data disk first. You may have done this when installing 7.04, but if not, you need to do it before upgrading to 8.04
Again Ubuntu forums is the best source for the instructions.
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