Actually, it is completely *legal* to run Windows in a VM, the police will never
come after you for doing it.

It might not be allowed under Microsoft's license agreement, which might be a
contract between you and Microsoft -- or maybe not.

There was a time when I followed this issue closely, but I haven't heard
anything about it for years. The last time I heard something, the courts were
not impressed by clauses such as, "by opening this box, you are agreeing to the
following conditions," or the requirement to click "I agree" in order to use
something you paid for.