WSS/SPS 2003 not supported under Virtual Server in a production environment
http://support.microsoft.com/default.aspx?scid=kb;en-us;909840&sd=rss&spid=2528
While the KB article does not specifically state that there are any issues with running SPS/WSS under Virtual Server (I do it all the time without any problems), MS has not specifically tested this scenario so will not support it in a production environment.