I have read that you can use an environment variable, MYVIRTUALMACHINES,
to change location where VMC files are stored. Is that same with VPC
2007? I tried to set it but VPC still saves new VMCs to the default
location under My Documents.

Learned that hard way that undo disks on a network drive is sloooow :-).
I am using a laptop with roaming profiles and used undo disk and could
not understand why everything run so slow, until I realized it was
saving to the network.