Running the emulator
Before you download anything know that you'll need to be on Windows Vista or Windows 7 to run the emulator, so if you're still rocking Windows XP maybe now would be a good time to think about upgrading!
To begin, you'll need Microsoft's Visual Studio 2010 Express for Windows Phone CTP, available for a free download here. This is Microsoft's development environment and, once you have this, you'll have everything you need to write your own apps and get them deployed onto Windows Phone 7 Series handsets. That Microsoft has already released this to the public, long before handsets themselves will be out, gives us a lot of hope that there will be a substantial number of apps ready to roll as soon as the phones themselves are.
That is a fairly sizeable download, and so while that is coming in you'll also want to unlock the unlocked binaries for the OS itself that were created by Dan Ardelean, which can be retrieved here. This is a single file, .bin, which is a modified version of the default OS binaries that ship with Visual Studio Express. We found no viruses or anything else malicious in there, but you can never be quite sure these days, so proceed with caution.
After Visual Studio has downloaded, your computer will probably need a reboot, and then the installation will proceed. It takes awhile, so feel free to go get a coffee, and once complete you're ready to try out the emulator. The normal way to run it is to go into Visual Studio, start a new project, and then start debugging. But, you can create a shortcut as pointed out by various members of the xda-developers.com forums.
Open up Windows Explorer and browse to "C:\Program Files\Microsoft XDE\1.0\" (or to "C:\Program Files (x86)\Microsoft XDE\1.0\" if you're on a 64-bit OS). XDE.exe is the emulator, so right-click and select "Create Shortcut." Edit the properties of that shortcut and modify the Target so that it looks like the following:
"C:\Program Files\Microsoft XDE\1.0\XDE.exe" "C:\Program
"C:\Program Files (x86)\Microsoft XDE\1.0\XDE.exe" "C:\Program
Files (x86)\Microsoft SDKs\WindowsPhone\v7.0\Emulation\Images\WM70C1.bin"
Name the shortcut whatever you want, then run it, and you should be dropped right into the emulator -- with only IE to play with. Naturally you'll want more, so take that zip file you downloaded and extract the .bin file into the Microsoft SDKs\WindowsPhone\v7.0\Emulation\Images\ directory. Then, copy that shortcut you made and modify the Target to look like the following:
Or:"C:\Program Files\Microsoft XDE\1.0\XDE.exe" "C:\Program
Execute that and you'll have access to everything."C:\Program Files (x86)\Microsoft XDE\1.0\XDE.exe" "C:\Program
Files (x86)\Microsoft SDKs\WindowsPhone\v7.0\Emulation\Images\WM70Full.bin"
The unlocked emulator gives an interesting glimpse into the OS itself, which we already know an awful lot about, but trying it for yourself is always more fun than reading about what someone else thinks of it. Surely right now app developers are furiously working to get their apps ready for primetime as soon as Microsoft starts accepting submissions for the Marketplace, and now you curious users can check it too.
Update: In case you were wondering, the screenshot up at the top is from a quick app we whipped up in Visual Studio, just dropping a picture control on there and compiling. It literally took about 30 seconds to get it built and running in the emulator -- not that it really does anything.