You might have some luck with using vt32 on VT capable processors.

I won't have such a CPU before the first quarter of 2006.

You can try removing all hardware from VM...

I've already done that - and still no luck. Worst of all is that I cannot get OS/2 installed even in Microsoft Virtual PC - as it gives an error while trying to copy namemove.exe file:

Copying: Diskette 2

File: C:\OS2\SYSTEM\NAMEMOVE.EXE

SYS0318: Message file OSO001.MSG cannot be found for message 3175.