Qemu is a free x86 Emulator/Virtual Machine for Linux and Windows. For more information on Qemu itself.
Grabbing debug messages
By default, ReactOS debug messages are sent to the serial port (COM1). For grabbing that output, you need Qemu version 0.6.1 or later, in which you can specify the -serial option.
$ qemu -serial stdio -cdrom roslive.iso -boot d
If you are testing the setup CD, note that you can change the kernel arguments by editing the txtsetup.sif file (So things actually get written to the serial port).
Tested on Windows XP and Vista with qemu 0.9.0:
C:\qemu>qemu -L . -hda C:\qemu\ReactOS.vmdk -cdrom C:\RosBE\Source\Reactos.iso -serial file:con
Be sure to use the paths valid depending your configuration an program paths.
ReactOS preloaded with QEMU
A preloaded QEMU image of ReactOS can be found here.