I am looking to build a Linux-based system that runs multiple instances of desktop versions of operating systems. I'd like it to do the following:

1.Each desktop VM will have complete control of the monitor when I am interacting with it. That is, I don't want to see the VM in a window of the host OS. Switching between the VMs would be as easy as a keystroke.
2.The computer has two monitors and I would like separate desktop VMs to control each. Moving the mouse between one monitor and the other will send the mouse events to the appropriate desktop.

The computer I am am using supports full virtualization. It has 4GB of memory and plenty of disk space. I can install everything from scratch.

I have searched but cannot find any discussions on virtualization running multiple desktop versions. All discussions I've found are about running multiple (headless) servers.

I would suggest using generic remote desktop tools to access the VM's and not make that a requirement of the virtualization itself. The sooner you can treat them as normal computers the better. So any virtualization platform will mostly likely be suitable. I know KVM is.

Mr. Kewpie,
Thanks for your reply. When you say "treat them as normal computers", that's exactly what I'm trying to accomplish. A normal computer would have complete control over the screen and keyboard. I'd like to be able to type, for example, ctrl-F1 for desktop #1 and ctrl-F2 for desktop #2. When each desktop appears it will appear (to the user) as if it is the only OS running on the computer. And for the two monitors it will appear as if two computers are running - just sharing the keyboard/mouse. The keyboard/mouse control would be given to the OS depending on where the mouse is positioned. For example, desktop A will have control when the mouse is positioned on screen A and likewise Desktop B will have control when the mouse is positioned on screen B.

Can you expand on what you mean by "generic remote desktop tools"? Do you mean, for example, a VNC viewer? If not, please explain. If so, can I get the VNC viewer(s) to act as I described above (full screen mode, switching viewers by keystroke)?

I mean as if it were another machine connected to your local network, ignoring the fact that it's a VM. so yes, vnc, nx, rdesktop etc. VNC is a plague though, I'd strongly suggest you avoid it and use nx instead, as that's ace. As for the subtleties of full screen and the likes, there are a lot of clients out there if you do use VNC, I'm sure one would suffice.