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When trying to install OS/2 from floppy/CD-ROM
with Virtual PC 6.1 I get 'SYS0045:Cannot find the
sector requested' for drive C (Virtual PC harddrive)
using Easy Install option. Has anyone successfully
installed OS/2 Warp 3 with VPC 6.1? What were the
VPC settings for the New PC?

I had the same problems when installing OS/2 Warp 4 under 6.1. There is a workaround that I discovered (I'm even putting together a step-by-step OS/2 under VPC install guide).
The trick for me was to boot the new Virtual PC with a FreeDOS RAM disk and then format the C: drive as a FAT16 FreeDOS boot disk. Once this was done, I was able to install OS/2 without any troubles at all. During the setup, I even told OS/2 to reformat the drive HDFS and all went well.
I think the trouble is that OS/2 disk utilities are confused by the dynamic expanding drive that VPC creates (just try using the OS/2 FDisk on a VPC unformatted drive and you'll see what I mean). Once you get it formatted with a FAT16 OS, all is well.
You can get the FreeDOS bootable floppy image from the FreeDOS web site:
http://www.freedos.org/
Now, the only problems I'm having is getting the TCP/IP and networking stuff ot install without an error :(

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