Somebody clicked a link above that put the URL for this page into one of my logs and I stumbled on it just now. I'm sure the subject is no longer important but just in case it might help somebody:
I'd like to point out a small detail for people who are still using K/Ubuntu 11.04: The PulseAudio system is quite sophisticated and the people who maintain it consider it to have some security issues. As such, in 11.04, they had a bunch of features that were turned OFF by default. They were related to the permissions that a VM could get so that it would talk to Pulse.
If you rummage around the various configuration files for virt-manager, KVM and Pulse Audio you can just change the settings to allow VM's to talk to the local pulse installation without restriction (well, it makes sense if you are the only user on a desktop - don't do it if you are sharing a server with multiple users.) Sorry I can't remember the specifics. I have had no reason to look at any of this stuff since upgrading to K/Ubuntu 12.04.
Regarding RDP: For a long time there were bugs in rdesktop related to audio. At some point the problems were resolved and I used rdesktop without any difficulty. Unfortunately I can't remember if it was the rdesktop group that changed their code or if the solution was to change the permissions in Pulse. In any case I don't remember any significant difficulty under K/Ubuntu 11.10 and, once again, I'm not having any sound issues as of K/Ubuntu 12.04
Finally, FYI, some months after I wrote the above-mentioned howto about spice (which has moved, btw, to this link and remains one of the most popular articles on my site,) Canonical did incorporate the most excellent SPICE work of Mr. Derzhavets into the main Ubuntu repos. So, if you upgrade now to K/Ubuntu 12 you will find that SPICE just works - out of the box, no voodoo - with both WinXP and Linux VM's.
I should mention that K/Ubuntu 12.04 gave me choppy video (I was watching Netflix over a local network to a WinXP VM,) but it did work. Now I've upgraded to 12.10 and the video is smooth, audio is excellent. Again: this is out of the box. Just create your VM and, if it's WinXP, install the appropriate SPICE drivers. Instructions are available in the same howto
If you have VM's that you created under K/Ubuntu 11 you can follow the instructions under "Modifying a VM's Hardware Configuration" to add SPICE support.
Note that your video drivers might give you better/different results on 12.04 and even 12.10. Also I am using the simple spicec client, not the more sophisticated client that is called via virt-manager.)
HTH and thanks for the link! All the best, God bless, --Sam.
Best Answer
If you want something that really rocks, you'll probably want to have a look at SPICE, which works with KVM and the newest virt-manager. It really is something else. The last time I played with it on Ubuntu, it was a little difficult to get up and running, but it was definitely worth it. I know people have been working to make this easier, but I don't know how how far they've come.