It is possible to install PGP Desktop without using the drive encryption. You could still have the option to use the PGP Portable feature, or encrypt portable/external devices with whole disk encryption.
Depending on the virtual environment, however, PGP Desktop may not work as desired, and may have issues with the virtual connection to the physical external device for encryption. It is generally not a supported configuration, which means that it may work, but has not been tested through QA.
That being said, I have encrypted several flash drives connected to VMware-hosted Windows XP/7/8 installations that did not run drive encryption on the internal drives.