5 Freeware virtualization softwares for creating operating system:

Virtualization software allows allows you to run 2 or more operating system at the same time, side by side. The virtualization software works by setting up a virtual machine on the host computer, which emulates the hardware and behaves as a machine of it's own.
There are several virtualization softwares available in the market. Some of them cost you money ( VMWare
Parallels Workstation , Paralles for Desktop (for Mac) , Virtuozzo while some of them don't.

There are many more options available. Here are some of the best FREE virtualization solutions :

Microsoft Virtual PC 2007
VirtualBox
Virtual Iron
PearPC (for running Mac inside Windows and Linux)
Bochs
QEMU