Thanks for the info. Even though it showed the kernel was smp, it did not show 2 processors. I ran the commands anyways to switch it, and on the next reboot it showed smp again, but this time both processors were shown. So 1.2.3 worked in vm.
As I now have a good vm setup, I eventually got 2.0 working and settled on 2.0. Seems to work better, and it is the future.
Part of the vm idea to me is also the ease of use of it. take snapshot, then try upgrades. If all dies, revert to a saved image. My windows boxes has always been this way, but switching the router over was a bit of a conceptual change for me. Physical boxes only good for NAS setups/vm boxes for me from now on.
Thanks again for the tips. It's appreciated when the developers have time to help us out!