Yes to both. I've never tried copying anything other than text, but it works just fine. You do have to use the correct shortcuts for each OS, ie. cmd-c to copy from the Mac, then ctrl-V to paste into Windows. As for transferring files, there are several options. Drag and drop works, so you can drag files from the Mac into the VPC window and vice versa. Also, you can set up shared directories that both the Mac and PC can see. I do believe that these features require that you install Virtual PC additions in Windows. You can do so from one of the menus in VPC, but I think maybe only Windows 2000 and XP are supported.