Virtualization – Can XP Run as a Virtual Machine with This Hardware Spec?

I think it would be possible in Vmware Workstation but this solution is not free.

Other solution is using VirtualBox which was covered in this question on serverfault

Long story short: yes.

Each virtual machine is technically "independent" of one another, and with VirtualBox, you could easily do this, since it is supported on both Windows and Linux host operating systems (emulated or not). You could simply use Windows as your "base-host" OS, run Linux in a VM, and then use that operating system as the new base-host for Bochs.

Do note that your only limitation here is your hardware. Depending on the requirements of your development, you may require more memory, or an upgrade to a 64-bit "base-host" operating system. That being said, if you choose your Linux distros wisely, any modern system should be capable of arbitrary nesting like this.

You will see improved performance if you enable x86 virtualization support on your computer (if your motherboard and CPU support it), and AFAIK, you can "pass through" this feature to multiple nested virtual machines. If we have n virtual machines nested in eachother, this is supported so long as the 1^st to the n-1^th nested guest OS has support for x86 virtualization (the base host must also support it). Do note that there are still some security issues to be aware of if you do this, so take the appropriate precautions.