[oso2k]

Only if they never call DOS or the BIOS or execute a Real Mode Software Interrupt. When they do, they ask the DPMI server (which could be an OS like Windows 9x or CWSDPIM) to make the call on their behalf. In doing so, the DPMI server will temporarily enter into a VM86 Virtual Machine to do execute the Real Mode code being requested.

http://www.delorie.com/djgpp//doc/libc-2.02/libc_220.html

[trollbridge]

But that's not the DPMI client running in a VM. That's the host ending up running in a VM.

Note that in a machine with EMM386, the machine is normally running DOS inside an 8086 VM... and the only reason it would switch out of that VM is when you fire up a DPMI client.