I have played with this a bit and works very nicely, BUT.. it does leave a fair few traces of its use around in the registry.
It seems to be base on QEMU but with less control over the settings.
Heres what the site says about it.
http://mobalivecd.mobatek.net/en/MobaLiveCD is a freeware that will run your Linux LiveCD on Windows thanks to the excellent emulator called "Qemu".
MobaLiveCD allows you to test your LiveCD with a single click : after downloading the ISO image file of your favorite LiveCD, you just have to start it in MobaLiveCD and here you are, without the need to burn a CD-Rom or to reboot your computer.
I guess it depends on how fussy you want to be. If you want no traces then this isn't any good for you. But you will only get the traces of QEMU running not the applications you run on the virtual system.
Anywaaaay... its running great on my key and I like it
Let me know what you think.
n.b. I forgot to mention that it will run direct from the download without installing or any messing around..