Install Ubuntu 6.06 in a VM, copy it to my XP drive then use my copy of Ubuntu 5.10 to copy it onto my laptops hardrive through a USB caddy (damned blank cd's cant find any).
It's "Microsoft Virtual PC". Would you expect it to work? Try VMWare instead, it is the "de facto" virtualization software. Not only that, they are the pioneers of virtualization which started just a few years ago (i still remember it beeing on sourcefourge and receiveing awards of project of the month).
You can download the packages alone.
sudo apt-get -d install package1 package2...
They will be located in /var/cache/apt/archives
Get them onto the Ubuntu machine (usb stick, floppy, cd, whatever) and they should be installable with ease.