wow, sounds like i have much to learn! Well I would think NAT is best for my needs, although uncertain. But question is do I "need" to get to the outside world in order to download? This sounds silly but do I need virusware? I have none on the Mac as is but although I know it is necessary for bootcamp unsure about fusion. I am concerned about this of course. Doesnt sound like I will need bootcamp at all. And just twice the work, any thoughts on this? Maybe some benefit to having it but not sure what.
I wouldn't say that you have much to learn... you have much to play with. Different options will be better for different things.
If you need to download then yes you will need access from your VM to the outside world. IE7 is by definition an outside world program. IE it is supposed to connect to websites.
WinXP is extremely vulnerable to viruses and threats. Especially if you run IE7. (better than 6 but still can be crashed easily).
There are several things that should offer you piece of mind:
1) The MacOS is not very prone to virus and other attacks. So far the virus pep boys have not targeted this OS strongly. While they exists they are not common and do not transmit well through Windows machine (which are the vast majority out there).
2) Since your WinXP is in a VM you can sort of hide it behind the MacOS by using the NAT feature. However once connected to a website via IE7 you have opened a conduit directly from the outside world into your WinXP VM. So yes you should have some kind of AV stuff installed on your WinXP to be safe.
3) Since your WinXP is a VM and as such resides in a set of files you can very easily copy and save off "clean versions." This to me is one of the biggest and best features of VM technology. I can now run WinXP install ANYTHING I want and if it blows up my XP install (as many bad programs can) I simply stop the VM, copy over my recent clean copy and move forward. I cannot tell you how many times I have re-installed WinXP because my son (on his computer) started to click on pop ups. Some of the pop ups got around pop up blockers and installed free shopping desktops and thousands of other things. At one point his computer was impossible to turn on as it would start popping up window after window of free offers and would bog down the CPU. It required a full wipe and re-install. With VM technology, life would have been MUCH MUCH simpler.
So when you finally decide on Parallels or Fusion here is the path to take:
1) Install your XP. After it has installed, let it download all service pack updates from M$. Once it is done. Shutdown windows (like normal) and this will stop the VM. Now copy this VM file somewhere safe and name it: Clean XP install. You now have a base XP machine to revert back to.
2) Now start installing your printer drivers, IE7 and whatever you want. At each point where you have success, repeat step 1 but name the VM something different like: Clean XP with printer driver working.
3) Finally you will get to a state where you have everything installed and working as you want it. Including AV. Make sure you save this machine before you start doing any real work. It is your primary recovery too.
I make sure to have on hand about 3 different backups of my VMs. I have clean, recent good working and a few others. They have saved my bacon more than once.
The only way to do something similar to this in bootcamp is to use an imaging tool liek Acronis. I can do all this copy/restore while I work in MacOS.
Also bootcamp eats up some number of gb of your drive for the partition. While the VMs do the same in Fusion or Parallels you can host them on an external drive if you wish thereby leaving your entire Mac HD for the Mac.
M