A couple people (Jeff Prosise and my technical editor for the recent book) have recommended I use Microsoft Virtual PC for installing beta versions of .NET and Visual Studio that I need for writing. Instead, I use a more extreme approach to isolating the beta software: disk partitions.
On a secondary partition, I do a clean install of Windows XP Pro with SP2, then MS Word 2003 and a printer driver, then whatever beta verson of .NET and Visual Studio I need to be using, and that's it. Sometime during the VS install, I make a screen capture of the dialog showing the list of stuff being installed, and I save the bitmap to the desktop. That way, I know what to uninstall (in reverse order) when the next beta becomes available. If the previous beta doesn't uninstall well (which sometimes happens), it's not too hard to just reformat the partition and start over.
The wisdom of this approach was reinforced when reading "Meet the Life Hackers" by Clive Thompson in yesterday's New York Times Magazine. In part, the article concerned the effect of multiple distractions and interruptions (telephone and email primarily) on the modern office worker, and possible solutions. Larger screens and multiple screens seem to help, and, of course, people are also working on software solutions and changes of work habits.
I rarely get phone calls in my home office, and the secondary partitions don't even have Outlook Express set up on them. Interrruptions are almost entirely eliminated, and distractions are lessened because there's not too much else to do except work. I still have an Internet connection on these secondary partitions because I often need to download beta versions, but if I want to visit some particular site, I need to type the URL. In this way, my 6 to 8 hour daily stints on the book are very focused, very intense, and (usually) very productive. I can take breaks — for example, to boil up a couple veggie dogs for lunch — and at that time I can boot up the primary partition to check my email, but these breaks come at natural rest points rather than imposed by an external interruption. Then I boot up the secondary partition and it's back to work.