I tried DSL in VM briefly, until I found it didn't like my network card and no amount of convincing was able to tell it otherwise (that's still on my to-do list, if it is even possible).
I also used FC4 with no GUI (both on a its own PC and in a VM) to create a bridge server using OpenVPN so my friends could join in over the internet (haven't tested the VM version yet). The server was an older iteration of EQEmu (6.0DR2) running on a Win98 box; it ran decently, but kicked you out when you zoned. So I know that is possible too and maybe the newer version will be more stable in that regard.
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