you don't need to burn the iso and make it bootable, or make it bootable in any case.
Don't know how it works in VirtualPC, but in VirtualBox you can mount the iso for the allocated VM, and run it from there.
Have a look at the VBox' manual on the page
Ubuntu/Kubuntu shouldn't be a prob to run in virtualbox, it's supported by it. Probably will have to install the
additional guest items too though, after installing ubuntu, for better graphics/network/etc.
and yes, works, I've just set up Kubuntu myself on my vista within a VM