To determin whether you have DirectX10 support and at least DDI10, run DxDiag.exe from the command-prompt and inspect the Display tab.
So what next, ok so I learned that in order for the emulator to make use of the GPU host from the VM I needed to enable HW virtualization. So how do I know if I have this enabled? this is enabled at BIOS level and normally disabled by OEMs by default. You can run the Microsoft Hardware-Assisted Virtualization Tool here: http://go.microsoft.com/fwlink/?LinkId=163321
So after running this tool I got the above. So this confirms that I didn't have hw virtualization enabled. After enabling it in the BIOS my Windows Phone 7 Series emulator is now running much faster!
More details about this process here (not WP7 specific): http://www.microsoft.com/windows/virtual-pc/support/configure-bios.aspx