I've been wanting to have a play with Windows Phone 8 development recently, especially as I'm planning on trading in my worn out iPhone 4s for one of the new Nokia Lumias. I do most of my Windows development on a Mac using VMware Fusion so I fired up a Windows VM, installed the Windows Phone SDK and created a new project.
Pressing play was when everything went wrong.
You see, the Windows Phone Emulator runs as a virtual machine in Hyper-V, and VMware doesn't like it when you run virtualisation inside of virtualisation.
Fortunately the answer turned out to be rather simple, I just needed to change the virtual machine settings and set 'OS' to Hyper-V (unsupported). You'll find it under the 'Microsoft Windows' group.
Start the VM up again, run your project, et voilà: a working Windows Phone Emulator!
I'm not sure what the (unsupported) warning means in the OS name, but at the time of writing I've been running it for over three months, so it's pretty stable.