The answer in "peculiarity" is correct and directly answers the question. As TimF answered, since the first parameter is in quotes, it is treated as a window title.
Also note that the Virtual PC options are being treated as options to the 'start' command itself, and are not valid for 'start'. This is true for all versions of Windows that have the 'start' command.
This problem with 'start' treating the quoted parameter as a title is even more annoying that just the posted problem. If you run this:
start "some valid command with spaces"
You get a new command prompt window, with the obvious result for a window title. Even more annoying, this new window doesn't inherit customized font, colors or window size, it's just the default for cmd.exe.