Recommended VM Software and Version of Linux

Umm, gui - cli a bit too spartan :)

I'm a long time Manjaro Openbox user which only has a Window Manager, no Desktop Environment. I recently switched over to Manjaro PekWM environment which is even lighter faster. Both are light weight and way less bloated than any gnome, kde, xfce etc desktop.
Manjaro is based on Arch linux which I have a lot of love for.

Alternatively if you want something Debian based look at Crunchbang.
 
I recommend Virtualbox if your i7 machine if is your primary desktop.

I run KVM on my HP N54L with only power + Ethernet cable connected. :)
 
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