Being that a Xbox is pretty much just really low spec PC would it make sense to treat this like virtual machine rather then emulate it? Maybe someone can explain the difference to me if this is a silly question.
Trust me, it's not that simple to just VM it like a normal PC. Even if you do virtualize the CPU, you'll still have to do some low level emulation and there's no way around that. The Xbox's BIOS boots differently than a PC's and requires many more steps before you can expect that BIOS to boot. Second, Xbox uses PC similar hardware, NOT identical! Other parts of it aren't even PC standard and are custom made exclusively for Xbox.
Virtualization can be done (and technically, the CPU is being virtualized already), but the concept is not that easy to pull off contrary to common belief.